Suppose that a firm is considering opening a plant on the moon, and the current exchange rate is 12 dollars per moon piece (mp). Also, the wage rate is 1.60 mp per hour. Suppose further that US workers can produce 620 units per hour, while workers on the moon can produce 500 units per hour. Suppose the US wage rate is $26.50 per hour. If the US managers want to become the location of choice for production, and if they cannot lower their wage rate due to labor agreements, what does the labor productivity in the US need to become?
Suppose that a firm is considering opening a plant on the moon, and the current exchange rate is 12 dollars per moon piece (mp). Also, the wage rate is 1.60 mp per hour. Suppose further that US workers can produce 620 units per hour, while workers on the moon can produce 500 units per hour. Suppose the US wage rate is $26.50 per hour. If the US managers want to become the location of choice for production, and if they cannot lower their wage rate due to labor agreements, what does the labor productivity in the US need to become?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter15: International Trade And Finance
Section: Chapter Questions
Problem 10SQP
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Suppose that a firm is considering opening a plant on the moon, and the current exchange rate is 12 dollars per moon piece (mp). Also, the wage rate is 1.60 mp per hour. Suppose further that US workers can produce 620 units per hour, while workers on the moon can produce 500 units per hour.
Suppose the US wage rate is $26.50 per hour. If the US managers want to become the location of choice for production, and if they cannot lower their wage rate due to labor agreements, what does the labor productivity in the US need to become?
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