Assignment:
In this research and analysis assignment of two to three pages, you will use the concepts of:
o law of diminishing returns,
o marginal productivity, and
o economies of scale
to analyze a business operation's decisions regarding number of employees, skills, and locations in a global economy. You will be asked to support your findings with examples of how economic issues of international trade impact production and consumption decisions.
(This question can be found on the text's web site athttps://highered.mcgraw-hill.com/sites/0078021707/student_view0/chapter12/web_notes.htmlweb note 12.1)
In a global economy, seeking the most economically efficient method of production may mean shifting production of labor-intensive goods (like clothing) to low wage countries. Even if two technically efficient methods of production exist in two different countries, extremely low wages more than offset the other costs involved in producing a good for sale in a different country (e.g. transportation), low-wage production will be economically efficient.
The resulting global labor market has not been accepted by all. Many citizens of the rich and poor countries ask whether these low-wage, low-skill, jobs assembling goods for export are helpful or harmful to the future economic development of the poor countries.
China is often cited as a source of low-cost labor. But, as wages in China increase due to increased demand for Chinese workers, this cost advantage will erode. See Indexes of Hourly Compensation Costs at the Bureau of Labor Statistics for wages in manufacturing.
As wages in China rise, what will happen to its comparative advantage? What will happen to outsourcing? Given the effect of globalization on wages, does your support or criticism of globalization change? Support the position you have taken with examples.