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# U.S. and global economics Essay

Fill out the tables for each scenario and answer the question that follows. Use \$7.25 as the minimum wage and remember that employees in the United States must be paid time-and-a-half (1.5 times the normal hourly rate) for each hour worked over 40 hours per week.

Scenario 1. A team of three laborers in Mongolia makes rugs by hand for export to the United States. The team makes 12 rugs per year working 14 hours a day, six days a week, 50 weeks a year. Each laborer is paid a wage equivalent of \$1.10 per day. The materials for each rug cost \$50, and the company that sells the rugs has fixed costs of \$10,000 per year for things such as energy, rent, and administrative and shipping costs. Each rug sold for \$2000 in the United States.

Total Labor Cost Total Materials Cost Fixed Costs Total Revenue Profit

(3 points)

(1 point)

(1 point)

(2 points)

(3 points)

If a team of three workers, each making the U.S. federal minimum wage, produced these 12 rugs, what would the total labor cost be? Don’t forget that these workers would be working overtime. (5 points)

Scenario 2. A team of five laborers working in a garment factory in Indonesia divides the task of making men’s dress shirts for export to the United States. Each laborer works 10 hours a day, six days a week, and is paid the Indonesian minimum wage of \$2.50 per day. In one week, the team can make 500 shirts. The company spends \$10,000 each week to cover advertising, administration, machinery, transportation, and other expenses. Each shirt sold for \$40 in the United States.

Total Labor Cost Labor Cost Per Shirt Total Revenue Fixed Costs Total Profit Profit Per Shirt

(2 points)

(2 points)

(2 points) \$10,000

(2 points)

(2 points)

How much would it cost to pay five workers at the U.S. federal minimum wage to do the same job in the same amount of time? (5 points)

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