If the hourly wage of U.S. workers is $16, the hourly wage of Mexican workers is $2, and U.S. workers produce 9 times as much output per hour as Mexican workers, then, all else equal, it would be efficient to locate production facilities in:
A. Mexico since the cost per unit of output will be higher.
B. the United States since the cost per unit of output will be lower.
C. Mexico since the cost per unit of output will be lower.
D. the United States since the cost per unit of output will be higher.
Answer: B
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