Asked by GRETE ELISE WAGNER PAR on Jul 02, 2024

verifed

Verified

​If company X is successfully outsourcing its production of T-shirts to China,it is

A) ​Creating wealth by moving labor in China from lower value use to higher value use
B) Should be stopped on economic grounds since it is destroying wealth
C) Destroying wealth by acquiring cheaper labor from China
D) ​Both A & C

Outsourcing

The business practice of hiring parties outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees.

T-Shirts

Casual shirts made of fabric, typically having short sleeves and no collar, popular for everyday wear.

Economic Grounds

The basis or rationale for decisions or actions based on financial or economic factors.

  • Evaluate the consequences of trade restrictions and outsourcing on economic wealth.
  • Appreciate the cause and effect relationship between economic actions, policies, and the resulting wealth formation or destruction.
verifed

Verified Answer

SM
Sunshine Madir6 days ago
Final Answer :
A
Explanation :
By outsourcing production to China, company X is able to take advantage of lower labor costs and increase their profitability. In turn, this creates wealth in China by providing employment opportunities and allowing labor to be used in a higher value way than it might otherwise be used. It does not necessarily destroy wealth, as option B suggests, because the money saved on labor costs can be reinvested in the company or used to provide additional benefits to the employees or shareholders. While it is true that outsourcing can sometimes lead to negative consequences such as job loss or lower wages in the home country, overall it is a legitimate business strategy that can benefit both the company and the global economy.