Rivoli Chapter 1 Questions

 1. Where is the Rheinsches’ farm?  Find that location on a map and memorize it.
Smyer, Texas it’s near Lubbock, Texas in the Panhandle of Texas.

 2. On the Rheinsches’ farm how many acres are required to produce the cotton necessary to make one T-shirt?
1000 acres = 1.3 million shirts; 1000/1.3 million = .00076 acres

 3. How is cotton production exceptional in the recent history of US economic industries?
US cotton growers have retained global dominance in production.  They lead the world in production, exports, yield, and farm size.  This is exceptional because so many US industries (electronics, apparel, steel production) have lost their dominance as production has moved to other countries.

 4. Who are US cotton farmers’ competitors?  Where do they live?  Explain how this is unusual.
Farmers in some of the world’s poorest least developed regions.  This is unusual because US industries (automobile manufacture) tend to compete with other wealthy countries (Japan) not with some of the poorest countries in the world



 5.  Memorize the questions in the last full paragraph on page 5.
a. How do US cotton growers lead in exports during a period (since 1975) in which US has operated a merchandise export deficit?
b. How do they export a raw material to poor countries?
c. Why is west Texas the leading region of US cotton production?

 6. Look up comparative advantage and learn its definition.  Rivoli uses the term often in this book.
The ability to produce a good at a lower cost, relative to other goods, compared to another country. With perfect competition and undistorted markets, countries tend to export goods in which they have a Comparative Advantage.

7. According to Oxfam, what is the root of US growers’ comparative advantage?
US cotton growers collect government subsidies.


 8. Find Benin and Burkina Faso on a map.  What was the basis of their farmers’ complaints at the WTO meeting in Cancun?
US cotton subsidies precluded cotton farmers in poor countries from successfully competing with them in global markets.

 9. Does Rivoli agree with their arguments?

 10. What factors does Rivoli identify to explain US growers’ dominance?
1. US dominance predates government subsidies.
2. US cotton growers’ exceptional entrepreneurial abilities.
3. Support institutions.

 11. List 4 or 5 of the risks that US growers face.
Weather, weeds, volatile prices, labor market risk, foreign competition, financing