Question

In Mexico, 6 workers, each making the equivalent of $40/day can make a combined total of 40 units/day. In (rural) China, 10 workers, each making the equivalent of $20/day can make a combined total of 70 units/day. In the US, 2 workers, each making the equivalent of $200/day can make a combined total of 150 units/day. Which would be the most appropriate location to manufacture considering direct labor costs alone

Answer 1

Answer:

US

Explanation:

Particulars  Number    Output    Labor cost  Total        Labor productivity

                    of labor   per day   per day     labor cost     (d ÷ c)

                   (a)               (d)             (b)             c = (a × b)                                              

China            6             40           $40        $240             0.1667

Mexico         10             70          $20        $200            0.3500

US                 2             150         $200     $400            0.3750

As we can see that the labor productivity is more in the US so the same is to be considered as an appropriate location