1. As a result of the North America Free Trade Agreement, many ionic "American" cars are not assembled in the United States. Please explain why? Provide some examples of U.S.cars that are assembled outside of the United States?
2. Outsourcing of services by American firms has contributed significantly to wage growth in India. Explain why usint a graph of the Indian labor market?
3. Chanel perfume is sold in France and in the United States. Assume initially that one Euro is worth $1.30 and that the a 100ml bottle of perfume sells for $80 in the United States. If Chanel does not price discriminate internationally, what is the price that would be paid for this perfume in France? Now suppose that Chanel decides to price discriminate and finds that it would maximize its profits by lowering its price in the United States to $70 and raising its price by 25% in France. Explain why? Next, explain what happens if the value of the Euro rises by 25% in terms of the dollar?