A worker in Thailand can earn $12 per day making cotton cloth on a hand loom. A worker in the United States can earn $82 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?

Question

Quizplus · Accepted Answer

The primary reason for the difference in wages is the difference in productivity between using a mechanical loom and a hand loom. Mechanical looms significantly increase the amount of cloth a worker can produce in a day compared to hand looms, leading to higher wages.

A Worker in Thailand Can Earn $12 Per Day Making