Labor services in a country might be underpriced relative to productivity because
A)workers are not allowed to freely move across national boundaries to seek higher wages.
B)some countries do a bad job of educating their work force,consequently they are not very productive.
C)in some countries there is a shortage of capital investment.
D)all of the options are equally important

Question

Quizplus · Accepted Answer

When labor is not allowed to freely move across national boundaries to seek higher wages, labor markets are not competitive, and wages may not properly reflect the workers' productivity levels. This can result in underpriced labor services relative to productivity. While B and C can also affect productivity, A is the main reason for the underpricing of labor services in a country.

Labor Services in a Country Might Be Underpriced Relative to Productivity