Question 4. Consider an offshoring model where the labor usage of four activities in the U.S. and Mexico are as follows: Assembly Component Office R&D Production Services Unskilled labor Mex: 10 Mex: 6 Mex: 4 Mex: 2 U.S.: 5 U.S.: 3 U.S.: 2 U.S.: 1 Skilled labor Mex: 2 Mex: 2 Mex: 4 Mex: 20 U.S.: 1 U.S.:1 U.S.: 2 U.S.: 10 Skilled/Unskilled 1/5 1/3 1 10 Ratio Suppose that the wages of unskilled and skilled workers in the U.S. are 1 and 2, respectively. In Mexico, suppose that the wages of unskilled and skilled workers are 1/4 and 1.5, respectively. Compute the costs of production of each activity in each country. Make a table (a) like the one below and fill it with numbers. Mexico U.S. (b) Assembly Component Production Office R&D Services Which activities are going to be performed in the U.S. and which activities are going to be performed in Mexico?

Question 4. Consider an offshoring model where the labor usage of four activities in the U.S. and Mexico are as follows: Assembly Component Office R&D Production Services Unskilled labor Mex: 10 Mex: 6 Mex: 4 Mex: 2 U.S.: 5 U.S.: 3 U.S.: 2 U.S.: 1 Skilled labor Mex: 2 Mex: 2 Mex: 4 Mex: 20 U.S.: 1 U.S.:1 U.S.: 2 U.S.: 10 Skilled/Unskilled 1/5 1/3 1 10 Ratio Suppose that the wages of unskilled and skilled workers in the U.S. are 1 and 2, respectively. In Mexico, suppose that the wages of unskilled and skilled workers are 1/4 and 1.5, respectively. Compute the costs of production of each activity in each country. Make a table (a) like the one below and fill it with numbers. Mexico U.S. (b) Assembly Component Production Office R&D Services Which activities are going to be performed in the U.S. and which activities are going to be performed in Mexico?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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