Wages earned by workers in the nation of Ruritania are only a third as high as the wages paid to Canadian workers. This clearly means that Canadian firms that outsource production to Ruritania will enjoy much lower costs of production.

Question

Quizplus · Accepted Answer

While lower wages in Ruritania might reduce labor costs, the overall cost of production also depends on other factors such as productivity, quality of infrastructure, transportation costs, tariffs, and the cost of materials, which might offset the lower labor costs.

Wages Earned by Workers in the Nation of Ruritania Are