which scenario benefits business in each country most and why? TOMATO CASE The purpose of this exercise
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which scenario benefits business in each country most and why?
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"TOMATO CASE" The purpose of this exercise to better understand the distinctions between different modes of cross-border economic relations and different levels of countries' economic integration. The students review and discuss different scenarios of cross-border trade and factor mobility between the U.S. and Mexico when producing tomatoes. ASSUMPTIONS U.S. and Mexico - equally productive land Transportation (from Mexico to the U.S.) - $0.75/bushel Workers pick 2 bushels/hour/30 days picking season VARIATIONS LABOR COSTS CAPITAL (SEEDS, FERTILIZERS, EQUIPMENT) COST 1 BUSHEL (A) "NO TRADE" MEXICO $4/DAY = $0.25/BUSHEL COST 1 BUSHEL $0.50/BUSHEL COST 1 BUSHEL MEXICO $0.75 (B) "TRADE MOBILITY" MEXICO $0.75 MEXICO $0.65 (B) "TRADE MOBILITY" MEXICO U.S. COST 1 BUSHEL $0.65 $20/DAY = $1.25/BUSHEL SCENARIO I "NO FACTOR MOBILITY" $0.30/BUSHEL U.S. (A) "NO TRADE" Mexican workers on permit living expenses $14.40/day = $0.90/bushel At the same time the U.S. invests capital in Mexico tomato production; capital cost decrease to $0.40/bushel U.S. $1.55 U.S. $1.50 SCENARIO II "FACTOR MOBILITY $1.45 U.S. $1.40 "TOMATO CASE" The purpose of this exercise to better understand the distinctions between different modes of cross-border economic relations and different levels of countries' economic integration. The students review and discuss different scenarios of cross-border trade and factor mobility between the U.S. and Mexico when producing tomatoes. ASSUMPTIONS U.S. and Mexico - equally productive land Transportation (from Mexico to the U.S.) - $0.75/bushel Workers pick 2 bushels/hour/30 days picking season VARIATIONS LABOR COSTS CAPITAL (SEEDS, FERTILIZERS, EQUIPMENT) COST 1 BUSHEL (A) "NO TRADE" MEXICO $4/DAY = $0.25/BUSHEL COST 1 BUSHEL $0.50/BUSHEL COST 1 BUSHEL MEXICO $0.75 (B) "TRADE MOBILITY" MEXICO $0.75 MEXICO $0.65 (B) "TRADE MOBILITY" MEXICO U.S. COST 1 BUSHEL $0.65 $20/DAY = $1.25/BUSHEL SCENARIO I "NO FACTOR MOBILITY" $0.30/BUSHEL U.S. (A) "NO TRADE" Mexican workers on permit living expenses $14.40/day = $0.90/bushel At the same time the U.S. invests capital in Mexico tomato production; capital cost decrease to $0.40/bushel U.S. $1.55 U.S. $1.50 SCENARIO II "FACTOR MOBILITY $1.45 U.S. $1.40
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Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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