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Unformatted text preview: government intervention? X Y Z ABC Produce Not Produce -40,25 60,0 0,150 0,0 3. Strategic trade. The cost for production is 3,000 per car in the US and 2,000 per car in Japan. Suppose automobile prices are described by the following inverse demand function: P = 60,000 & 20(Xus + Xj) (a) Derive the reaction function for US producers. IE Xus(xj), express the number of US cars produced as a function of Japanese production. Now consider the reaction functions graphed below and use them to answer the questions b and c. Xus X j (b) Which reaction function does the arrow point to? Xus(Xj) or Xj(Xus)? (c) What factors may cause any US strategic trade policy attempts to fail? List 2....
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This note was uploaded on 09/24/2008 for the course ECON c181 taught by Professor Harrison during the Fall '06 term at University of California, Berkeley.
- Fall '06