A worker in Thailand can earn $2 per day making cotton cloth on a hand loom.A worker in the United States can earn $80 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Question

Quizplus · Accepted Answer

The difference in wages is due to the productivity difference between using a hand loom and a mechanical loom. The worker using a mechanical loom in the US can produce cloth at a much faster rate than the worker using a hand loom in Thailand. This leads to a difference in wages as the worker using a mechanical loom is producing more cloth and is therefore more productive, making them more valuable to the textile industry.

A Worker in Thailand Can Earn $2 Per Day Making