ECO HW 5

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University Of Georgia *

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2106

Subject

Economics

Date

May 23, 2024

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doc

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2

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HW5, Spring 2023 Read the articles on Megaships, Solyndra, Chicken Farming, and automation at WalMart and respond to the questions below. You should type your answers and upload to Canvas prior to the due date. Megaships 1. Why did companies, such as Maersk, initially develop these megaships? The idea was that if you crammed more containers onto less carriers then you would save on fuel and labor costs, while concentrating more loads into fewer port calls also will save time and operating costs. 2. According to the article, are these megaships actually saving companies money? Explain using examples from the article. The research and policy-coordination group says the ships have led to overcapacity and steep price cutting that will put financial pressure on container ship operators for several years. “The development of the world container fleet over the last decade is completely disconnected from developments in global trade and actual demand,” the OECD report says, citing research by McKinsey & Co. that estimates a 20% gap between shipping capacity and demand that will persist until at least 2019. “The effect of this overcapacity is low freight rates, which will undermine the profitability of the container shipping sector.” Solyndra 1. Read the article on Solyndra, paying particular attention to the paragraph about 3,000 workers building a larger factory. What is going on with Solyndra? What happened to their costs with the new factory? What mistake did they make? Solyndra was given a loan by the US government to help them build a new factory with higher capacity for making solar energy tubes. The problem was that the new factory increased fixed costs and not enough people were buying the solar tubes. The old factory they were using was also inefficient because it was more expensive to produce the product then they could sell for it. The mistake they made was taking the loan from the government, because that also caused investors not to buy into the comnapny because if it failed the government would be first in line to claim its loan. Chicken Farming While the farmer makes revenue from farming alligators, this was not his motivation for adding alligators to his existing chicken farm. His motivation was to save money/reduce costs. 1. How does the presence of alligators reduce the costs of farming chickens? Because it’s the most natural form of recycling, use the dead chickens from the farms to feed the alligators. Then he sells the alligators hide to companies in Italy who use it for clothing and other luxury goods. 2. How does the presence of chickens reduce the costs of producing alligators? Because you’re not spending money on feeding them. Instead you’re recycling. Labor-Capital Substitution; Thought Question
1. When you think about automation in the labor market (that is, the substitution of human labor for robots/technology), what type of industries and/or occupations come to mind? Car companies, technology companies, manufacturing companies 2. Read the article on automation at Walmart. Based on you reading of the article, how would you summarize the types of tasks that are being automated? Walmart Inc. is expanding its use of robots in stores to help monitor inventory, clean floors and unload trucks, part of the retail giant's efforts to control labor costs as it spends more to raise wages and offer new services like online grocery delivery.
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