Question

question 4 (1 point)
table 17 - 4
consider trade relations between canada and mexico. assume that the leaders of the two countries believe the payoffs to alternative trade policies are as follows:
refer to table 17 - 4. pursuing its own best interests, when will canada play the low tariff strategy?
under no circumstances
regardless of the strategy that mexico y plays
only if mexico plays a high tariff strategy
only if mexico plays a low tariff strategy

Explanation:

We need to compare Canada's pay - offs when Mexico chooses high tariffs and low tariffs.

• When Mexico chooses high tariffs:
• If Canada chooses high tariffs, its pay - off is \( \$65 \).
• If Canada chooses low tariffs, its pay - off is \( \$35 \). So when Mexico has high tariffs, Canada will not choose low tariffs.
• When Mexico chooses low tariffs:
• If Canada chooses high tariffs, its pay - off is \( \$140 \).
• If Canada chooses low tariffs, its pay - off is \( \$130 \). So when Mexico has low tariffs, Canada will not choose low tariffs.

Answer:

Under no circumstances