(Table: Labor Requirements) the Table Gives U

question 28

Multiple Choice

(Table: Labor Requirements) The table gives U.S. and Indian labor requirements (hours per unit of output) needed in each of four activities to produce the final product. Suppose that wages of unskilled and skilled workers are $10 and $20 in the United States and $1 and $5 in India. Further suppose that trade costs equal 25% of wage costs in India. Now where is the value chain sliced? Which operations will the United States offshore to India?

• A) assembly operations only
• B) assembly operations and component production
• C) assembly operations, component production, and office services
• D) assembly operations, component production, office services, and R&D

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Definitions:

Breach

The violation or failure to comply with a legal obligation, contract, or agreement.

Restitution

Compensation or repayment for loss, damage, or injury caused to another party.

Tort

A wrongful act or infringement of a right leading to civil legal liability, not arising from a contract, but through negligence, defamation, and other such acts.

Electrician

A skilled tradesperson who installs, maintains, and repairs electrical systems and equipment.