Mexico has daily (rather than hourly) minimum wage laws. In 2013, the daily mini
ID: 1211702 • Letter: M
Question
Mexico has daily (rather than hourly) minimum wage laws. In 2013, the daily minimum wage in Mexico was about 70 pesos per day, and the exchange rate between Mexican pesos and U.S. dollars was about 8 pesos per dollar.
a. In 2013, what was the Mexican minimum daily wage in terms of dollars?
b. Given that Mexican employees typically work 8-hour days, about how much per hour is the Mexican minimum wage in terms of dollars?
c. In 2013, the federal minimum wage in the United States was $7.25 per hour. How many times larger was the hourly U.S. federal minimum wage than the hourly Mexican minimum wage?
Explanation / Answer
A) ONE DOLLAR IS EQUAL TO 8 PESOS. MINIMUM DAILY WAGE IN TERMS OF DOLLARS = PERDAY WAGE IN PESOS / EXCAHGE RATE = 70/8 = $8.75 PER DAY.
B) PER HOUR WAGE IN DOLLAR TERMS = PER DAY WAGE IN DOLLAR / 8 = 8.75 / 8 = $ 1.09 PER HOUR
C) COMPARED WGAE WILL BE = PER HOUR WAGE IN US / PER HOUR WAGE IN MEXICO
= 7.25 / 1.09 = 6.65 TIMES.