Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 25, Problem 9CQ
To determine
Wage rate of Country M’s workers.
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A firm is considering moving from the United States to Mexico. The firm pays its U.S. workers $15.00 per hour. Currently, U.S. workers have a marginal product of 30 units, whereas Mexican workers have a marginal product of 6 units.
In order for the firm to reduce its wage cost per unit of output by moving to Mexico, the wages in Mexico must be below $___ per hour.
We often work with production technologies that give rise to initially increasing marginal product of labor that eventually decreases. Are the following statements then True or False? Explain.A negative marginal product of labor necessarily implies a downward sloping production frontier at that level of labor input.
Galaxy, a multinational corporation, has two plants, one in the United States and the other in Mexico, and it cannot change the size of the plants or the amount of capital equipment in the short run. The wage in Mexico is equivalent to US $5 per hour. The wage in the U.S. is $25 per hour. Given current employment situation, the productivity per worker in Mexico is 200 units per hour, and the productivity per worker in the U.S. is 400 units per hour.Is Galaxy maximizing output relative to its labor cost? If not, what should Galaxy do? Justify your
Chapter 25 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Which of the following is required for all workers to earn identical wages in the long run? Check all that apply.arrow_forwardA software firm has only two inputs to production: domestic programmers based in the firm’s U.K. office and international programmers working from home in low-cost countries.The two types of programmers are perfect substitutes but domestic programmers are more productive due to better communication in the office. The production function is:S = 2D + IWhere S is the amount of software written, D is the number of domestic programmers and I is the number of international programmers. Programmers can work part-time, so hiring 0.3 of a programmer would be possible.(a) The firm must produce 10 pieces of software this year. Show the firm’s isoquant in a suitably labelled graph. Put “domestic programmers” on the vertical axis and “international programmers” on the horizontal axis. Label each axis from 0 to 10.arrow_forward“After the fifth worker is hired at the hourly wage $40, the output rate increases from 64 pairs of shoes per hour to 72 pairs per hour.” Given the statement, which of the following is correct after the fifth worker is hired? Group of answer choices The marginal cost (MC) becomes $8. The marginal physical product (MPP) per labor hour becomes 5. The marginal cost (MC) becomes $5. The marginal physical product (MPP) per labor hour becomes $40.arrow_forward
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