Situation 26-1 a Company Is Trying to Decide Whether It

question 171

Multiple Choice

Situation 26-1 A company is trying to decide whether it should produce good X in the U.S. or in Mexico.  Suppose a U.S. worker earns $15 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 12 units of good X and the MPP of the Mexican worker is 3 units of good X.
Refer to Situation 26-1. The output produced per $1 of cost in Mexico is

• A)12.0 units of good X.
• B)1.0 units of good X.
• C)1.33 units of good X.
• D)0.75 units of good X.

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Definitions:

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Gross Profit Percentage

A financial ratio that expresses the gross profit as a percentage of sales revenue, indicating the efficiency of production and cost management.

Cost of Goods Sold

Costs directly related to the creation of a company's sold products, involving expenses for materials and workforce.

Net Income

The total earnings of a company after subtracting all expenses from revenues, which includes costs, interest, taxes, and other expenditures.