Here are a couple of economics riddles.
An American buys a product from Wal-Mart that was made in China. Wal-Mart charged the American $1. How much of the $1 do the Chinese actually get?
In an unspecified time period, American's buys $2000 of goods from China. In that same amount of time, China buys $500 of goods from America. Where does the difference of $1500 go?
Hint: The answers are in percents, eg: 10% goes to fixing Chinese manufacturing machines.
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For #1:
ReplyDeleteAs I understand it, the price of the product should basically be = < cost of making product + < manufacturer profit > + < cost of shipping > + < cost of selling good > + < sellers profit >. I assume shipping is relatively high, and I've heard Walmart tries to stick it to their suppliers, in order to keep prices down, so I'm going to say something like $1 = .20 + .05 + .15 + .15 + .45, so 25 cents goes to China.
For #2:
China gives it back to America for bonds?