Janitors in India Might Make $1,000 Per Year, While They

question 38

Multiple Choice

Janitors in India might make $1,000 per year, while they could easily earn $20,000 per year in the United States. How is this a forgone gain from trade?

• A) Indian janitors are less concerned with earning a high wage than are American janitors.
• B) The United States is a cleaner country than India, so it has less use for janitors.
• C) Total surplus would be higher if the Indian janitors could come to the United States to work.
• D) Total surplus would be higher if American janitors could go to India to work.

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Definitions:

Variable Expense Ratio

The proportion of variable expenses to total sales, illustrating how variable costs change with sales levels.

Break-even Point

The level of production or sales at which total revenues equal total costs, resulting in zero profit or loss.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenues, reflecting the ratio of fixed costs to variable costs.

Advertising Budget

The amount of money allocated towards advertising products or services to enhance sales and market presence.