A worker in Bangladesh can earn $1 per day making cotton cloth on a hand loom.A worker in the United States can earn $100 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Question

Quizplus · Accepted Answer

Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. The use of mechanical looms in the U.S. increases productivity and enables the production of a higher volume of cotton cloth. This higher productivity justifies the higher wages in the U.S. compared to Bangladesh where hand looms are used.

A Worker in Bangladesh Can Earn $1 Per Day Making