With free trade, why is wage (income) gap between American skilled and unskilled workers widened? Which of the following is LEAST appropriate for an answer? A. Because American companies producing very expensive products need to hire more skilled workers while American companies producing inexpensive products do not at least hire more of unskilled workers or even reducing the employment of the existing unskilled workers. B. Because American people are willing to buy inexpensive products imported from other developed countries having comparative advantage in producing those inexpensive products rather than inexpensive ones manufactured in the USA. C. Because American companies producing very expensive products need to produce more and more by hiring more American skilled workers as demand for American expensive products from developing countries increases. D. Because free trade allows the USA to focus on specializing in producing very expensive products requiring American skilled workers and advanced technology.
With free trade, why is wage (income) gap between American skilled and unskilled workers widened? Which of the following is LEAST appropriate for an answer?
| A. |
Because American companies producing very expensive products need to hire more skilled workers while American companies producing inexpensive products do not at least hire more of unskilled workers or even reducing the employment of the existing unskilled workers. |
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| B. |
Because American people are willing to buy inexpensive products imported from other developed countries having |
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| C. |
Because American companies producing very expensive products need to produce more and more by hiring more American skilled workers as demand for American expensive products from developing countries increases. |
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| D. |
Because free trade allows the USA to focus on specializing in producing very expensive products requiring American skilled workers and advanced technology. |
Part A → As country A is using skilled laborers for the production of expensive products at the same time, industries producing inexpensive products are reducing the demand(dd) for unskilled workers and shifting towards more and more capital intensive & skilled workers oriented techniques of production. This leads to falling (↓) in the dd for unskilled / semi-skilled workers in the market and pushing their wages downwards. Consequently, the wage gap is widening. This is a relevant reason.
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