Question: Can u help me to answer this question. 4. Strategic trade policy Suppose there are only two producers of electronics in the world, HighTech in

Can u help me to answer this question.

Can u help me to answer this question. 4. Strategic trade policy

4. Strategic trade policy Suppose there are only two producers of electronics in the world, HighTech in the United States and Inobeshon in Japan. The following hypothetical payoff matrices show the prots (in millions of dollars) for each company. In the absence of subsidies, if only one company makes semiconductors, it receives a prot of $85 million. If both companies decide to produce, they each lose $4 million. When a company decides not to produce, it earns zero prot. lnobeshon Produce Not Produce Produce -4, -4 85. 0 HighTech Nol Produce 0, 85 D, 0 Suppose that Japan considers electronics a strategic industry and gives lnobeshon a $7 million subsidy if it produces. Fill in the cells of the following payoff matrix to reect the $7 million subsidy. lnobeshon Prod uoe Not Produce ....... l:1.i | l u l HighTech With a $7 million subsidy, regardless of whether HighTech produces or not, lnobeshon V produce if it wants to maximize its prot. True or False: Because lnobeshon will enter the market if given a $7 million subsidy, HighTech should not produce in this industry. 0 True 0 False

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