Situation 26-2 A Company Is Trying to Decide Whether It Should Produce

question 116

Multiple Choice

Situation 26-2
A company is trying to decide whether it should produce good Y in the U.S. or in Mexico. Suppose a U.S. worker earns $12 per hour and a worker in Mexico earns $4 per hour. Also suppose that the marginal physical product (MPP) of the U.S. worker is 10 units of good Y and the MPP of the Mexican worker is 5 units of good Y.
-Refer to Situation 26-2. If good Y is produced in the United States, the output per $1 of cost would be ___________________ than if good Y were produced in Mexico, thus it would be best to produce good Y in ____________________.

• A)higher; Mexico.
• B)lower; Mexico.
• C)higher; the United States.
• D)lower; the United States.

Comprehend the basis and effects of norms on individual and group behavior.

Identify factors that affect group communication and cohesiveness.

Distinguish between additive, disjunctive, and conjunctive tasks within group settings.

Recognize different types of role conflicts and ambiguity, and their implications on employee behavior.

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Definitions:

Optimal Capital

The best mix of debt, equity, and other financing sources to maximize a firm’s value while minimizing its cost of capital.

Swaps

Financial derivatives where two parties agree to exchange cash flows or other financial instruments for a set period of time.

Currency Swaps

Bilateral agreements to exchange periodic payments where the payments are based in two different currencies.

Financial Intermediary

An institution that facilitates the channeling of funds between lenders and borrowers indirectly.