If Japanese workers receive lower wages in the production of autos than do American workers:
A) Japan will have a comparative advantage in the production of autos
B) Japan will have an absolute advantage in the production of autos
C) Production costs will be lower in Japan than in the U.S.
D) Production costs could be lower in the U.S.if American labor productivity is higher than the Japanese

Question

Quizplus · Accepted Answer

Lower wages alone do not determine comparative or absolute advantage. If American labor productivity is higher, production costs could still be lower in the U.S. despite higher wages.

If Japanese Workers Receive Lower Wages in the Production of Autos