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In 2009 the American auto industry is in a dire economic state. Chrysler is in Chapter 11, GM is on the brink of bankruptcy, and Ford s future is at best uncertain. The demise of the U.S. auto industry will have a devastating impact on our national economy and specifically the economies of Michigan and Ohio.

Economists occasionally use Porter s five forces framework when making a qualitative evaluation of a firm s strategic position. According to Porter, his model should be used at the industry level, defined as a marketplace in which similar or closely related products or services are marketed. This research paper requires the application of Porter s Five Forces Model to the auto industry.

Porter s analytical framework consists of those forces that affect a producer s ability to serve its customers and make a profit. A change in any of these five forces requires a re assessment of the marketplace. The five forces include:

1) The threat of substitute products: The existence of close substitute products (i.e., high elasticity of demand) increases the propensity of customers to switch to alternatives in response to price increases.

2) The threat of the entry of new competitors: Unless there are significant barriers to entry, profitable markets that yield high returns will attract firms (i.e., perfect competition), effectively decreasing profitability.

3) The intensity of competitive rivalry: As in the case of oligopoly markets, rivals may choose to compete aggressively, non aggressively or in non price dimensions.

4) The bargaining power of customers: The ability of customers to put the firm under pressure due to availability of existing substitute products, buyer price sensitivity, uniqueness of the products, etc.

5) The bargaining power of suppliers: The cost of factors of production (e.g. labor, raw materials, components, and services such as expertise) provided by suppliers can have a significant impact on a company s profitability. As such suppliers may refuse to work with the firm or charge excessively high prices for unique resources.

Effects of ration coupons and price ceilings in terms of demand, supply and market equilibrium.

How does a price ceiling undermine the rationing function of market determined prices? How could rationing coupons insure that consumers with the highest values get the limited amount of a good supplied when government price ceilings create shortages? Fully explain answer based upon demand, supply and market equilibrium.

A recent merger of note is that of Hewlett Packard and Compaq Computers. When the merger was announced, it was widely criticized as not making economic sense. Use the material in Managerial Economics to analyze the reasons for and against the merger, and to assess the performance of the consolidated company since its completion.

The merger continued to be in the news for months, and the CEO of the merged company, Carly Fiorina, was relieved of her duties on February 9, 2005.

Imagine a Congressman is proposing to improve the welfare of every citizen in the U.S. by paying a base income of $1,200 a month to everyone regardless of income,a ssets, age, etc. The argument of the congressman is that by doing so people could work in jobs they really like instead of working just to earn an income. What do you think of such a proposal? Specifically, evaluate this proposal in light of the income leisure model and make comments about what that model predicts about labor supply if such proposals would become law. Support your answer with a graph.

Prepare a 700 to 1,050 word paper in which you describe critical thinking.

Provide an example from your personal experience in applying critical thinking to a work related decision, and the importance and benefits of critical thinking in the decision making processes.

Cite at least two different references.

Format your paper consistent with APA guidelines.

FDI has grown rapidly in the last few decades due to increasing globalization and reduction in investment barriers in many nations across the world. Encourage of free trade, establishment of trading blocs and trade treaties has encourage cross border investments and thus, more and more companies have started exploring new markets across the world. Emerging markets or developing nations across the world has presented attractive opportunities to global companies and thus, boosted FDI.