Labor services in a country can be severely underpriced relative to its productivity
A)because workers are not allowed to freely move across national boundaries to seek higher wages.
B)because among all factor markets, the labor market is the most imperfect.
C)because workers may choose to not move across national boundaries to seek higher wages due to the cultural differences.
D)all of the above

Question

Quizplus · Accepted Answer

All three options can contribute to labor services being underpriced relative to their productivity. If workers are not allowed to freely move across national boundaries, then they may not be able to seek higher wages in other countries where the productivity of their labor is valued more highly. The labor market may also be imperfect because of factors such as monopolies, discrimination, or minimum wage laws. Finally, cultural differences and other non-economic factors may prevent workers from moving to other countries even if they would be paid more there.

Labor Services in a Country Can Be Severely Underpriced Relative