Suppose the US is relatively well endowed with skilled workers and Mexico is relatively well endowed with unskilled workers. Define ws as the wage of a skilled worker and wy as the wage of an unskilled worker. The production of widgets is unskilled labor intensive and the production of gadgets is skilled labor intensive. Both factors of production are mobile across industries but immobile across countries. Assume perfect competition in both markets. In the U.S., the unskilled workers support the free trade policy because free trade is beneficial. False. True.

Suppose the US is relatively well endowed with skilled workers and Mexico is relatively well endowed with unskilled workers. Define ws as the wage of a skilled worker and wy as the wage of an unskilled worker. The production of widgets is unskilled labor intensive and the production of gadgets is skilled labor intensive. Both factors of production are mobile across industries but immobile across countries. Assume perfect competition in both markets. In the U.S., the unskilled workers support the free trade policy because free trade is beneficial. False. True.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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