Operations Research : Applications and Algorithms
Operations Research : Applications and Algorithms
4th Edition
ISBN: 9780534380588
Author: Wayne L. Winston
Publisher: Brooks Cole
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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...

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Chapter 14 Solutions

Operations Research : Applications and Algorithms

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