Situation 26-2 a Company Is Trying to Decide Whether It

question 76

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. The output produced per $1 of cost in the Mexico. is

• A)1.25 units of good Y.
• B)0.80 units of good Y.
• C)9.0 units of good Y.
• D)1.0 units of good Y.

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Definitions:

Market Efficiency

describes a market in which asset prices fully reflect all available information at any given time, making it impossible to consistently achieve higher returns.

Unexpected Return

The difference between the actual return of an investment and the expected return, usually arising from unexpected factors or events.

Expected Return

The anticipated return on an investment, accounting for the probabilities of different outcomes, including gains and losses.

Total Return

The overall financial benefit (or loss) of an investment over a specified period, including both capital gains and dividends.