A apperal Company Currently the shirts he sells are made at

A apperal Company Currently , the shirts he sells are made at a factory in the US where workers are paid $18 an hour and can make 103 shirts an hour. The company is thinking of outsourcing the labor to Mexico where the workers are paid 12 Pesos an hour and can produce 177 shirts an hour. The exchange rate is $1 US = 0.71 Pesos. What is the relative wage rate of operating in Mexico in this scenario?

Solution

Relative wage rate of operating in Mexico in this scenario

1 US = 0.71 Pesos,

0.71*12 Pesos=$8.52

apperal Company USA pays to mexico operating wages rate is $8.52 per hour

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