Why Is Caterpillar Considering Relocating Some Heavy­

question 6

Essay

Why is Caterpillar considering relocating some heavy­
equipment production to a new U.S.plant?

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Definitions:

Incentive Function

The way in which economic rewards or penalties influence the actions of individuals and firms.

Competitive Markets

Markets where multiple firms are in rivalry to attract consumers, characterized by free entry and exit, leading to efficient outcomes.

Price Increases

An upward adjustment in the cost of goods or services, typically reflecting higher production costs or increased demand.

Economic Rents

Earnings that exceed the minimum amount necessary to keep a factor of production in its current use.