Problem 1. Explain why the U.S. would subsidize the short run costs of production for tobacco farmers in foreign countries? Do these practies guarantee the tobacco farmers a profit in the short run? Explain
Problem 2. How does theis practice shift the equilibriums (price and output) for tobacco and domestic food items (analyze both the local and international effects?
Problem 3. What are the production gains to the entire company of Amce in Nuevo Laredo and why do they make engine in Laredo than the whole auto?
Problem 4. Why would Acme Motors shift its production of engines from Detriot to Mexico and then shift the engines back to the U.S. to be assembled into the finsihed auto?
Problem 5. What are the gains and losses for consumers in these types of international production and trading pattterns?
Analyze short-run and long runs costs.