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A company is trying to decide whether it should produce good X in the U. or in Mexico. Suppose a U. worker earns $15 per hour and a worker in Mexico...

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.


The output produced per $1 of cost in Mexico is

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