Explain why the wto is more concerned

Assignment Help Microeconomics

Reference no: EM131478992

Question: 1. Explain why the WTO is more concerned with the use of direct export subsidies than production subsidies in achieving the same level of domestic support.

2. Boeing and Airbus are the world's only major producers of large, wide-bodied aircrafts. But with the cost of fuel increasing and changing demand in the airline industry, the need for smaller regional jets has increased. Suppose that both firms must decide whether they will produce a smaller plane. We will assume that Boeing has a slight cost advantage over Airbus in both large and small planes, as shown in the payoff matrix below (in millions of U.S. dollars). Assume that each producer chooses to produce only large, only small, or no planes at all.

a. What is the Nash equilibrium of this game?

b. Are there multiple equilibria? If so, explain why. Hint: Guess at an equilibrium and then check whether either firm would want to change its action, given the action of the other firm. Remember that Boeing can change only its own action, which means moving up or down a column, and likewise, Airbus can change only its own action, which means moving back or forth on a row.

Reference no: EM131478992

Questions Cloud

The god of the native americans : Explore why the Abramic Religions have been at war in one way or another throughout their history.

Calculate the overall net effect of the export subsidy : Refer to Problem. Suppose Home is a small exporter of wheat. At the world price of $100 per ton, Home growers export 20 tons.

Explain how you think european friends back home will react : Capture the image of each example and place it in the document. How you think your European friends back home will react to each object, and why.

What is the meaning of the term dark ages : What is the meaning of the term "Dark Ages"? Is it an appropriate description of Europe in the period from 500 - 800 A.D.? Why or why not?

Explain why the wto is more concerned : Boeing and Airbus are the world's only major producers of large, wide-bodied aircrafts. But with the cost of fuel increasing and changing demand in the airline.

What are the goals of employee selection : What are goals of employee selection? Compare and contrast two selection methods and how these selection methods impact achievement of organizational objective?

What is his main theme in the letter : Read George the III's letter. What is his main theme in the letter? What is his determination about the results of the war in terms of commerce?

Valerie and kenneth r curtis : Write a short essay using information from the text below with page citations on the Early Industrial revolution.

How does this affect the slicing of the value chain : Consider an offshoring model in which Home's skilled labor has a higher relative wage than Foreign's skilled labor and in which the costs of capital and trade.

User Account

All Pages