If, in a Tariff Game Between Two Governments, Both Countries

question 8

Multiple Choice

If, in a tariff game between two governments, both countries are on their tariff reaction functions, then each country __________ maximizing its welfare given the tariff of the other country. In this situation, there __________ incentive for each country to reduce its tariff unilaterally.

• A) is; is an
• B) is; is no
• C) is not; is an
• D) is not; is

---

Definitions:

Onerous Contracts

Contracts in which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received under it.

Accruals

Accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur, reflecting the economic activity more accurately.

Employee Benefits

All forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.

Insurance Contracts

Contracts under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specific uncertain future event adversely affects the policyholder.