Respond to classmate’s answers.
I need an explanation for this Economics question to help me study.
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Make sure to respond to each of them. Try to include any relevant microeconomic concepts or thinking as derived from your readings. Thank you!!
#1: Global coffee and competition.
Starbucks knows the market. This allows Starbucks to maintain a comparative advantage in China, although competitors have their own advantages, Starbucks easily adapts and markets products and services effectively. The stores are placed in highly trafficked areas of wealth and high demand, leading to large crowds of groups gathering in this hangout spot between work and home. Starbucks strategically alters menu items and store layouts according to geographical store location. Although sales had a 2-percent drop in recent years due to failure to adopt local technologies such as delivery, they drastically improved delivery technologies and are now excelling among their strong competitor, Luckin. This is all thanks to their ability to adapt and innovate to become uniform with whatever demographic they are trying to appeal to, while still being able to standout with high quality products and service.
#2: How high can Tariffs rise?
Initially, I don’t think that this economic initiative will show success. As stated in the article, the 25% increase would begin to cost the average household $770 more annually. This is because, China cannot simply afford to take on increased tariffs on their exports unless they increase their selling price promptly. As stated in the article, “You can’t have a 25% increase and not have an effect on retail prices,” said Stephen Kellogg. I believe the fundamental goal that may be reached is spending less money to support an economy in a different country, and eventually turning inward and beginning to manufacturing more products locally. America is severely dependent on the manufacturers stationed in China, most household items that surround you were imported from China. America is supporting their economy which is costing us now. The raised tariffs essentially is passing on costs to consumers. Another contributor also added, “The desire to not be dependent on China is here to stay,” said Thomas Baert, a CFL co-owner. I believe Donald Trump’s goal here is for Americans to begin shopping locally and supporting America’s own economy. Slowly but surely, the increase of tariffs on Chinese imports may very well achieve this.
#3: France and Free Markets!
Free market provides the competition between companies and companies. It leads to the diverse options for consumer to shop with multiply choices. While EU free market is more popular and development, US free market is shrunk and undeveloped. No wonder why US cellphone plans or airfares is less expensive than EU cost for 2 decades. US began to create more competition in their market in a good sign. However, it is not an optimistic way to go. Based on the article, Democrats and Republicans still have the viewpoint of anti- monopoly power. I think U.S somehow is prefer “merger” more than “ competition”. Since, Antitrust doctrine is still surround. Justice Department in charge of controlling cellphone business and it is difficult to down cellphone plan cost. In contrast, French’s billionaire supports great offer for cellphone lines with limited data in Free Market. In my viewpoint, it’s a struggling way for U.S. in creating competition when U.S still having a limited market.