Question

A factory owner might decide to manufacture shirts in Pakistan instead of the United States because

A.it is less expensive to make shirts there.
B.it is worth paying more for foreign labor.
C.workers in Pakistan are more skilled.
D.workers in Pakistan work fewer hours.

Answer 1

The first alternative is correct (A).

The change in the location of firms occurs in the context of productive globalization, when the multinationals sought to move their factories to countries where the cost of production was lower. If the company can lower the cost of production, it is possible to sell the product at a lower price and become more competitive. This is what happens when a factory decides to move its US factory to Pakistan. In that country labor is cheaper than in the US, so the company uses this opportunity to reduce costs and improve its competitiveness in the world market.

Answer 2

The correct answer is - A. it is less expensive to make shirts there.

Lots of big companies from the United States decided to open facilities in countries that are less developed. The reason for that move is that it is much less expensive than in the United States. The materials are usually less expensive, the labor force demands much lesser wages and also works for more hours. This conditions give the company to significantly increase its profit, and most of the owners do not hesitate a lot to make this move in the era of globalization.