Suppose that a large country imposes optimal tariffs on imports from another large country. The second country then responds with optimal tariffs on imports from the first country. For these two countries, the Nash equilibrium results in ___________ for the first country and __________ for the second country.
a. losses; losses
b. gains; gains
c. losses; gains
d. gains; losses
Ans: a. losses; losses
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A steel factory has the right to discharge waste into a river. The waste reduces the number of fish, causing damage for fisheries. Let X denotes the quantity of waste dumped. The marginal damage, denoted MD, is given by the equation MD = 2 + 5Q. The marginal benefit (MB) of dumping waste is given by the equation MB = 34 - 3Q.
(a) Calculate the efficient quantity of waste. (b) What is the efficient fee, in dollars per unit of waste, which would cause the firm to dump only an efficient quantity of waste? (c) What would be the quantity dumped if the firm did not care about the fishery?
No tax can lead the economy to higher levels of efficiency.
Answer the following statement true (T) or false (F)
As the real interest rate increases, households will make less purchases on credit cards.
Answer the following statement true (T) or false (F)
Gresham's Law
A) deals with the theory of regulatory forces in the economy. B) is the tendency for good money to drive bad money out of circulation. C) is the tendency for bad money to drive good money out of circulation. D) was passed in 1913, as part of the Federal Reserve Act.