All of the Following,except One,are Reasons Why Complete Free Trade

question 98

Multiple Choice

All of the following,except one,are reasons why complete free trade may not be possible.Which is the exception?

• A)Transportation costs might exceed any cost differences between countries.
• B)Higher taxes in one country than another might exceed any cost differences.
• C)Free trade usually causes a reduction in international competition.
• D)Differences in languages and cultures might restrict the amount of trade.
• E)Cost differences between countries disappear as one country tries to totally specialize.

---

Definitions:

Game Theory

The study of behavior in situations of interdependence. Used to explain the behavior of an oligopoly.

Dominant Strategies

In game theory, strategies that are best for a player, regardless of the strategies chosen by other players.

Payoff Matrix

In game theory, a diagram that shows how the payoffs to each of the participants in a two-player game depend on the actions of both; a tool in analyzing interdependence.

Dominant Strategy

In game theory, an action that is a player’s best action regardless of the action taken by the other player.