A multinational company is considering producing electric fans in Lydora, a less-developed country. The table shows its labour costs for producing 1,000 fans in two countries.
| Country | Labour cost for 1,000 fans |
|---|---|
| Current production country | £18,000 |
| Lydora | £12,000 |
Calculate the saving in labour cost for each fan if the company produces the fans in Lydora instead of its current production country.
Explain why this saving in labour cost may lead the multinational company to locate production in Lydora.
118 exam-style questions on AQA GCSE Economics 2.4 International trade and the global economy, covering 2.4.1a The importance of trade, 2.4.1b Advantages of trade and interdependence, 2.4.1c UK exports and imports, 2.4.2a How exchange rates are determined, 2.4.2b Effects of exchange rate changes, 2.4.3a Free-trade and its arguments, 2.4.3b Free-trade agreements such as the EU, 2.4.4a Features and growth of globalisation, 2.4.4b Benefits and drawbacks of globalisation, and 2.4.4c Moral, ethical and sustainability considerations. Each one has a worked solution and a mark scheme showing where the marks go.