It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to India, defies the logic of the Ricardian model. Let's examine if this is actually the case. The following table presents information on labor productivity in computer component production and call center services in Canada and India. Assume that Canada has an absolute advantage in both. To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to India, and indicate the good in which each country has a comparative advantage. Production per Employee Computer Components Call Center Services Country (Units per hour) (Phone calls per hour) Comparative Advantage Canada 18 India 3 Call center services Does the observed pattern of outsourcing from Canada to India, where Computer component production , support ne Togie or the Ricararan model? O Yes No

It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to India, defies the logic of the Ricardian model. Let's examine if this is actually the case. The following table presents information on labor productivity in computer component production and call center services in Canada and India. Assume that Canada has an absolute advantage in both. To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to India, and indicate the good in which each country has a comparative advantage. Production per Employee Computer Components Call Center Services Country (Units per hour) (Phone calls per hour) Comparative Advantage Canada 18 India 3 Call center services Does the observed pattern of outsourcing from Canada to India, where Computer component production , support ne Togie or the Ricararan model? O Yes No

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

10. The logic of service outsourcing - The Ricardian model
It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to India, defies the
logic of the Ricardian model. Let's examine if this is actually the case.
The following table presents information on labor productivity in computer component production and call center services in Canada and India.
Assume that Canada has an absolute advantage in both.
To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to
India, and indicate the good in which each country has a comparative advantage.
Production per Employee
Computer Components
Call Center Services
Country
(Units per hour)
(Phone calls per hour)
Comparative Advantage
Canada
18
9
India
3
Call center services
Does the observed pattern of outsourcing from Canada to India, where Computer component production
, support une Togie or tne RIcaralan mouel?
O Yes
O No

To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to
India, and indicate the good in which each country has a comparative advantage.
Production per Employee
computer components
Services
per hour)
Comparative Advantage
both call center services and computer components
call center services
neither call center services nor computer components
India, where India exports
, support the logic of the Ricardian model?
O Yes
O No

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