(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. What is the cost of conducting assembly operations in the United States and India?
A) $6 in the United States and $20 in India
B) $60 in the United States and $20 in India
C) $80 in the United States and $100 in India
D) $80 in the United States and $60 in India

Question

(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. What is the cost of conducting assembly operations in the United States and India? 
A) $6 in the United States and $20 in India 
B) $60 in the United States and $20 in India 
C) $80 in the United States and $100 in India 
D) $80 in the United States and $60 in India

Quizplus · Accepted Answer

To calculate the cost of conducting assembly operations, we need to multiply the labor requirements per unit of output by the wage rate for each country. The table below shows the calculations for each activity:

| Activity | US labor cost | India labor cost |
|----------|--------------|-----------------|
| A        | 20*10 = 200  | 25*1 = 25       |
| B        | 5*10 = 50    | 10*1 = 10       |
| C        | 20*10 = 200  | 5*5 = 25        |
| D        | 10*10 = 100  | 10*5 = 50       |
| Total    | 550          | 110             |

Therefore, the cost of conducting assembly operations is $80 in the United States and $60 in India (option D).

(Table: Labor Requirements) the Table Gives U