Say that the hourly cost to employers per German industrial worker is $43. The hourly cost to employers per U.S. industrial worker is $39, while the average cost per Taiwanese industrial worker is $10.

a. Give three reasons why firms produce in Germany rather than in a lower-wage country.

b. Germany has an agreement with other EU countries that allows people in any EU country, including Greece and Italy, which have lower wage rates, to travel and work in any EU country, including highwage countries. Would you expect a significant movement of workers from Greece and Italy to Germany right away? Why or why not?

c. Workers in Thailand are paid significantly less than workers in Taiwan. If you were a company CEO, what other information would you want before you decided where to establish a new production facility?