Mexico can produce vine-ripened tomatoes at a lower opportunity cost than firms in the United States. Through trade negotiations, the United States lifted quotas limiting the import of tomatoes from Mexico. Some firms in Florida, in the face of this new competition, had to close their farms and let go their workers. Many of the workers could not find new jobs right away. What type of unemployment describes the workers' situation?

Question

Quizplus · Accepted Answer

The workers' situation is described as structural unemployment, which occurs when there is a mismatch between the skills workers have and the skills needed for the jobs available, often due to changes in the economy such as new trade policies or technological advancements. In this case, the lifting of quotas and the subsequent competition from Mexico led to job losses in the Florida tomato industry, creating a situation where the workers' skills were not immediately transferable to new employment opportunities.

Mexico Can Produce Vine-Ripened Tomatoes at a Lower Opportunity Cost