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For your next white paper for company deployments, you have
For your next white paper for company deployments, you have been asked to write about trade, cost, and price using your work in Acme Mexico as one example.
Multinational corporations are continually seeking sources of comparative advantage by investing in developing countries. Sometimes, they are initially willing to pay a high price for that advantage. For example, U.S. tobacco companies create strong incentives for local farmers in developing countries to grow tobacco instead of crops used for domestic food production by offering underwritten loans, subsidies for startup costs, and a guaranteed demand for their tobacco crops. The following questions pertain to the foundations of modern trade theory and comparative cost of production and pricing decisions:
Explain why the U.S. would subsidize the short run costs of production for tobacco farmers in foreign countries. Do these practices guarantee the tobacco farmers a profit in the short run? Long run? Explain.How does this practice shift the equilibriums (price and output) for tobacco and domestic food items (analyze both the local and international effects)?In the case with Acme Motors, what are the production gains to the entire company from the facility in Nuevo Laredo, Tamaulipas specializing in Autoturbo Quattro engines (i.e., why do they just make engines in Nuevo Laredo rather than the entire auto)?Why would Acme Motors shift its production of engines from Detroit to Mexico and then shift the engines back to the U.S. to be assembled into the finished auto?What are the gains and losses for consumers in these types of international production and trading patterns?
explain international trade wars can take place and competition among nations is reduced.
Is it possible that the levels of unemployment present day which are the result of government policies.
Given the price elasticity of demand for two products & marginal cost, determine the optimal markups and prices under third-degree price discrimination.
Suppose that the car manufacturer allows the car dealer to return all unsold cars at the end of a recessionary year. What is the car dealer's profit in a growth year and in a recession? What is their expected profit?
Explain how would an increase in the present rate of oil affect the time of development if the rate of price increase in the future remains at 2%.
Express how long would it take for the price level to double if inflation persisted.
Elucidate what is the residual demand elasticity facing one firm at the competitive equilibrium.
What are two possible fiscal policy solutions for the problem? Using a Keynesian approach, you should be able to get numerical solutions. More points are given for numerical solutions.
An open economy has the following pattern of income and domestic expenditure: For each of the three years, evaluate the balance of trade facing the economy.
Illustrtyae what policies we should follow in resource allocation for health.
How much will this consumer be willing to pay for the product if the firm offering the reliable product includes warranty that will protect the consumer? Explain.
Assume an economy's real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP?
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