SCENARIO: CHILE AND THE UNITED STATES
Chile and the United States use capital and labor to
Produce wheat and automobiles.The United States is
Capital abundant, and Chile is labor abundant.Wheat
Production is more labor intensive than automobile
Production.
Reference: Ref 48
(Scenario: Chile and the United States) What is the
MOSTimportant reason why U.S.workers might oppose
u.S.Chile free trade?

Question

SCENARIO: CHILE AND THE UNITED STATES
Chile and the United States use capital and labor to
Produce wheat and automobiles.The United States is
Capital abundant, and Chile is labor abundant.Wheat
Production is more labor intensive than automobile
Production.
Reference: Ref 4­8
(Scenario: Chile and the United States) What is the
MOSTimportant reason why U.S.workers might oppose
u.S.­Chile free trade?

Quizplus · Accepted Answer

Since Chile is labor abundant and wheat production is more labor intensive than automobile production, it is likely that the U.S. will import more automobiles from Chile and export more wheat to Chile. This could lead to a decline in demand for U.S. labor in the automobile industry and an increase in supply of labor in the wheat industry, resulting in lower wages for U.S. workers in the automobile industry. Therefore, U.S. workers might oppose U.S.-Chile free trade because they anticipate a negative impact on their wages.