When U.S. companies open offices in Asia and hire workers there, it is evidence that:
A) workers in Asian countries have an absolute advantage over American workers.
B) workers in Asian countries have a comparative advantage over American workers.
C) American workers have already picked all of the low-hanging fruit in the US, forcing companies to look elsewhere.
D) all of the resources with low opportunity costs have been depleted.

Question

Quizplus · Accepted Answer

When U.S. companies open offices in Asia and hire workers there, it indicates that workers in Asian countries have a comparative advantage over American workers. This means that they can produce goods and services at a lower opportunity cost than American workers, making it more efficient for American companies to outsource to them. It does not necessarily mean that all resources with low opportunity costs have been depleted or that American workers have "picked" all the low-hanging fruit.

When US Companies Open Offices in Asia and Hire Workers There