Question

GLOBAL ECONOMICS 30 POINTS!

Answer 1

The labor cost for each shirt is $0.15.
It would cost $217.50 to pay 5 workers in the U.S. to do the same job in the same amount of time. 

Answer 2

Answer:

$5.08 per shirt

Explanation:

5 Indonesian laborers work 60 hours per week = 300 hours per week

they are paid $3.50 per day x 6 days x 5 workers = $105 per week

they produce 500 shirts per week, so the labor cost per shirt = $105 / 500 = $0.21 per shirt

if the firm operated in the US, they would need to pay each worker:

(40 x $7.25) + (20 x $10.88) = $507.60 per worker x 5 workers = $2,538

if they produce 500 shirts, the labor cost per shirt = $2,538 / 500 = $5.08 per shirt