Explain how products produced by high-wage workers in the United States can compete with the products manufactured in countries whose workers earn much lower wages.
What will be an ideal response?
POSSIBLE RESPONSE: Assuming that comparative advantage forms the basis for international trade, the United States is expected to have a comparative advantage in a set of goods in which its productivity advantage is the largest. Although wages in the United States are higher than those in the developing nations, the United States will still have a comparative cost advantage because U.S. workers are highly productive. If the productivity advantage is large enough, the cost of manufacturing these products in the United States will be lower despite the higher wages. The United States will thus be able to successfully export these products and import the products for which it does not have a comparative advantage.
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A. 67. B. 150. C. 100. D. 50.
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A) Solow pirates B) tertiary leeches C) Great Googly Mooglies D) patent trolls
Which of the following distinctions helps to explain the difference between relevant and irrelevant cost?
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What is convergence hypothesis? Why should we expect convergence in the long run?
What will be an ideal response?