Question 6 - A

[moni...@gmail.com]

Why might a multinational corporation with identical plants in two
countries pay different wage rates to workers in these two countries
even though their skill levels are the same.? (5)

[Don Spring]

Why might a multinational corporation with identical plants in two
countries pay different wage rates to workers in these two countries

even though their skill levels are the same? (5)

a. The competing ends would be jobs in each country where the economic
resource would be the workers with an economic constraint of skill
level required to complete the task. Therefore to reach the goal of
life satisfaction in one county requires less accounting price (wage)
to get there.

(DOES ANYONE THINK THIS IS ON THE RIGHT TRACK?)

[ANNE CHANCE]

This is on the right track.  In China every city/district has their own minimum wage rate.  Of course, the US has a federal minimum wage rate.  Also, in the US, particularly in unionized shops, employee make a certain wage according to a contract whereas in Mexico, workers can be paid a wage at or above the average wage rate.

[ANNE CHANCE]

This is on the right track; however, you might want to elaborate that, in China, every city/district has their own minimum wage rate.  The US has a federal minimum wage rate.  Also, in developing companies can set a wage they will pay workers (if a minimal isn't in effect); whereas, in the US workers receive wages unions have negotiated for them or have earned seniority which traditionally brings higher wages.

----- Original Message -----

From: Don Spring

To: Managerial Economics 2008

Sent: Sunday, February 10, 2008 6:15 PM

Subject: Question 6 - A

[anton]

Anne I would also add the opportunity cost to it. In those developing
if people don't take the available low paying jobs then they are left
with very few options. in other words opportunity cost would be very
low. So people are willing to work for a very low wage. On the other
hand in a country like USA opportunity cost is very high. People
have several options rather than stick to one low paying job. so huge
companies must pay a high wage rate to attract worker into their
workforce.

Anton

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[jeffp...@yahoo.com]

Anton,
I agree. I think that opportunity cost has to be added to this.
"Where unemployment is high, the opportunity cost of labor is low."
this is from the reading we had to read.
Jeff

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