Travels of a T-Shirt

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Travels of a T-Shirt

1. Describe Sherry Manufacturing Company-give a description.

• Sherry Manufacturing is a T-shirt screen printing business in Florida.

2. From whom does Gary buy his t-shirts?

• They import their t-shirts from China.

3. Who is Patrick Xu?

• Patrick is a cotton t-shirt producer that exports t-shirts to Sherry Manufacturing.

Chapter 1

1. How big is the Reinsch farm? How many t-shirts can be produced from the cotton?

• 1000 acres

• 5000 lbs of cotton that equals 1.3 million t-shirts.

2. Is a country’s comparative advantage permanent? Give some examples.

• No it is not permanent, unless other countries have the right climate. Also, low barrier entries help and lack of product differentiation help maintain an advantage right now. Labor cost however, could potentially cause a threat since they are so high in America.

3. What does Michael Porter say about industries like cotton?

• They have low average returns on investments, accessible to many competitors, and nations in the competitive market will continually face competition.

4. How has the American cotton farmer insulated himself from competition and risk?

• They receive government subsidies unlike the poor countries that compete with them and also they figured out how to compete and avoid risk in the market.

Chapter 2

1. Cotton and industrial revolution? Explain.

• Entrepreneurial developments allowed the spurt of the industrial revolution with inventions like the spin wheel.

2. What was the relationship between technology, productivity and prices?

• Technology allowed more production and with more production allowed cost to go down making it hard to compete with.

3. What role, or lack of, did competitive labor markets play in the success of farmers? What was the source of the farmer’s success?

• They barely functioned in the south because they were geographically isolated that made communication and transportation difficult. The unknown market made it a risk for many farmers to even produce at all especially with the reduction in whites wanting to be wage earners.

• The success was the availability of cheap land and labor of slaves.

4. Note the summary on page 13. Explain the slavery, labor market, business risk, production, and farm size relationships.

• Slavery allowed farmers to avoid risks in the labor market, which was a way around the family labor constraint. Slavery also helped by allowing greater masses of land to be covered for production instead of the free starts who maintained the farm with their families.

5. Who solved the problem above?

• Eli Whitney with his cotton gin.

6. What impact did the invention have on slavery?

• It solidified the slave plantation.

7. Explain crop lien laws?

• It changed the meaning of sharecropper to a laborer who was paid wages in crops rather than a tenet owning a share of the crop. Thus, he couldn’t offer his crop for lien and helped shut out the sharecropper of the capital markets making more capital for landowners.

8. What was the new type of cotton factory out West?

• The factory didn’t influence public policy, but was public policy in Texas.

9. Explain the company town. What function did it serve (consider slavery, sharecropping, etc)?

• The company town created housing, education, churches and maintained segregation. In turn, for the labor they complete, they get paid with scripts that are good for purchasing in company stores.

Chapter 3

1. Describe the AAA. Who benefited and who was hurt?
• The AAA is a government price support system that is given to agricultural farmers who experience profit losses. The farmers with larger landmasses benefit while the farmers with smaller land area like in the south have to receive...
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