Table 17-10
Each year the United States considers renewal of Most Favored Nation (MFN)trading status with Farland (a mythical nation).Historically,legislators have made threats of not renewing MFN status because of human rights abuses in Farland.The non-renewal of MFN trading status is likely to involve some retaliatory measures by Farland.The payoff table below shows the potential economic gains associated with a game in which Farland may impose trade sanctions against U.S.firms and the United States may not renew MFN status with Farland.The table contains the dollar value of all trade-flow benefits to the United States and Farland.

-Refer to Table 17-10.If trade negotiators are able to communicate effectively about the consequences of various trade policies (i.e. ,enter into an agreement about the policy they should adopt),then we would expect the countries to agree to which outcome?

Question

Table 17-10
Each year the United States considers renewal of Most Favored Nation (MFN)trading status with Farland (a mythical nation).Historically,legislators have made threats of not renewing MFN status because of human rights abuses in Farland.The non-renewal of MFN trading status is likely to involve some retaliatory measures by Farland.The payoff table below shows the potential economic gains associated with a game in which Farland may impose trade sanctions against U.S.firms and the United States may not renew MFN status with Farland.The table contains the dollar value of all trade-flow benefits to the United States and Farland.
 
-Refer to Table 17-10.If trade negotiators are able to communicate effectively about the consequences of various trade policies (i.e. ,enter into an agreement about the policy they should adopt),then we would expect the countries to agree to which outcome?

Quizplus · Accepted Answer

The best outcome for both parties would be if the United States renews MFN status with Farland and Farland does not impose trade sanctions, resulting in the United States receiving $130 billion and Farland receiving $275 billion in trade-flow benefits. This is the outcome with the highest combined payoff for both parties.

Table 17-10 Each Year the United States Considers Renewal of Most Favored