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Global Managerial Economics - Essay Example

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This essay aims to answer on several questions on the subject of global managerial economics and the role of the United States in it. The researcher focuses on the topic of costs of production for tobacco farmers in foreign countries, Acme Motors and types of consumers…
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Global Managerial Economics
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Global Managerial Economics

Download file to see previous pages... This essay presents answers on several questions about the United States and it's role and impacts on global managerial economics. Firstly, the researcher aims to explain why the United States would subsidize the short run costs of production for tobacco farmers in foreign countries and how does this practice shift the equilibriums (price and output) for tobacco and domestic food items. Any form of incentive is helpful to the tobacco farmer as well as the local economy which rely on the income of these industries to generate employment. Then, the researcher presents an analysis of both the local and international effects of this issue, such as an increase in marginal and average value of employment, because the incentives/subsidies could afford wage increase and this translates into an increase of production for existing firms and the incentive for new players to start-up with positive externalities. This essay then describes the case with Acme Motors and what are the production gains to the entire company from the facility in Nuevo Laredo specializing in Autoturbo Quattro engines. The researcher also discusses why do they just make engines in Nuevo Laredo rather than the entire auto. In addition, the researcher analyzes why would Acme Motors shift its production of engines from Detroit to Mexico and then shift the engines back to the United States and what are the gains and losses for consumers in these types of international production and trading patterns, that were described. ...Download file to see next pagesRead More
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