Multiple choice

Directions: For this question, select the best of the answer choices given.

The cost of manufacturing sports shoes in Macao is 25% less than the cost of manufacturing them in the Philippines. Even after transportation fees and tariff charges are added, it is still cheaper for a company to import sport shoes from Macao to the Philippines than to manufacture sports shoes in the Philippines. The statements above, if true, best support which of the following assertions?

  1. Labor costs in Macao are 25% below those in the Philippines.

  2. Importing sports shoes from Macao to the Philippines will eliminate 25% of the manufacturing jobs in the Philippines.

  3. The tariff on sports shoes imported from Macao to the Philippines is less than 25% of the cost of manufacturing sports shoes in the Philippines.

  4. The fee for transporting a pair of sports shoes from Macao to the Philippines is more than 25% of cost of manufacturing the shoes in Macao.

  5. It takes 25% less time to manufacture a pair of sports shoes in Macao than it does in the Philippines.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The best answer is (3). If the tariff on importing sport shoes from Macao to the Philippines were as high as 25% or more of the cost of producing sports shoes in the Philippines, then, contrary to what the passage says, the cost of importing sports shoes would be equal to or more than the cost of producing sports shoes in the Philippines. Thus, the tariff cannot be that high.

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