Suppose that a firm is considering opening a plant on the moon, and the current exchange rate is 1,320 moon pieces (mp) per dollar. Also, the wage rate is 23,040 mp per hour. Suppose further that U.S. workers can produce 220 units pe hour, while workers on the moon are expected to be able to produce 380 units per hour (the lower gravity level helps them work faster). a. The moon wage rate without considering productivity is $/hr (round your response to the nearest penny). b. The moon "relative" wage rate considering productivity is $/hr (round your response to the nearest penny). c. Suppose that the U.S. wage rate is $24.50 per hour. If the U.S. managers want to become the location of choice for production, and if they cannot lower their wage rate due to labor union agreements, what does the labor productivity in the U.S. need to become? The labor produtivity in the U.S. needs to be at least units/hr (round your response to one decimal place).

Step 1: Define of labor productivity

Step 2: computation of wage rate without considering productivity and wage rate considering productivity

Step 3: Relative wage rate

Solution