Operations Research : Applications and Algorithms
4th Edition
ISBN: 9780534380588
Author: Wayne L. Winston
Publisher: Brooks Cole
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Expert Solution & Answer
Chapter 14.4, Problem 5P
Explanation of Solution
a.
Equilibrium points:
The given data indicates that the two companies working together will create a loss of $10 billion each, one company alone producing can create a profit of $100 billion. If none make semiconductors, profits remain $0.
Based on the given data, a two-sum payoff matrix can be prepared as below:
Explanation of Solution
b.
Equilibrium points:
From the above matrix, to be considered a subsidy of $15 billion to the Japanese company.
Then the matrix becomes,
| Japanese |
Explanation of Solution
c)
Viewpoint supported by the problem:
- Protectionism can have short term benefits but on the long term makes consumer devoid of options and slows down the economy as a whole.
- This is why economists mention about the theory of comparative advantage...
Expert Solution & Answer
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Chapter 14 Solutions
Operations Research : Applications and Algorithms
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