Labor services in a country might be underpriced relative to productivity because
A)workers are not allowed to freely mover 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 above are equally important

Question

Quizplus · Accepted Answer

If workers are not allowed to freely move across national boundaries to seek higher wages, this creates a surplus of labor in the country in question, leading to lower wages relative to their productivity. This can result in underpriced labor services. While factors such as education and capital investment may also play a role in productivity, the restriction on labor mobility is a more direct cause of underpriced labor services.

Labor Services in a Country Might Be Underpriced Relative to Productivity