Question

4. The following table shows unit costs across different countries: Economy Footwear Textiles Clothing Metal Products Wood Products Rubber Products Plastic Electrical Products Machinery Egypt NA 1.50 0.50 0.85 0.48 1.50 1.23 0.93 India 0.99 1.01 0.49 0.97 0.91 0.88 0.88 0.85 Indonesia 0.85 0.47 0.95 0.55 0.53 0.72 0.64 0.76 Kenya 1.13 1.61 1.17 0.91 1.20 0.61 0.63 0.55 Malaysia 1.08 0.73 1.42 0.83 0.85 0.76 0.92 0.97 Mexico 1.62 0.96 1.20 0.76 0.76 0.96 0.83 0.83 Philippines 1.36 0.69 1.12 0.79 0.90 0.71 0.69 0.84 Thailand 1.23 0.87 1.70 0.71 0.57 0.56 0.83 0.65 Turkey 0.38 0.46 0.96 0.57 0.34 0.51 0.69 0.95 0.95 0.42 0.56 Zimbabwe 1.26 0.99 0.73 0.74 1.36 1.05 NA: Not available a. In what country should footwear be produced? how about clothing? b. What items should be produced in Mexico?

Answer 1

So for observing where must footwear be produced, we look into the country that has a least cost to produce footwear. So Turkey has a least per unit cost of 0.69. Thus footwear must be produced in Turkey

For clothing it is again Turkey as it has a lowest cost of 0.38

(B)

Mexico can produce metal as well as wood products cheaply as compared to other products. But we can clearly see that other countries can produce these products at a much cheaper cost. So no item will be produced in Mexico