According to the theory of comparative advantage, the reason wages are lower in China than in the United States is:
A) the higher cost of living in the United States.
B) lower productivity in China.
C) the lower opportunity cost to work in China.
D) more trade restrictions in the United States.

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, wages are lower in China because of lower productivity compared to the United States. Lower productivity means that workers in China produce less output per hour worked, which typically results in lower wages.

According to the Theory of Comparative Advantage, the Reason Wages