Which of the following statements is TRUE?
A) Only a high-wage country can benefit by trading with a low-wage country.
B) A high-wage country cannot benefit by trading with a low-wage country.
C) Trade raises the wages of workers in low- and high-wage countries.
D) There is an inverse relationship between productivity and wages.

Question

Quizplus · Accepted Answer

Trade can raise the wages of workers in both low- and high-wage countries by allowing them to specialize in the production of goods in which they have a comparative advantage. This specialization leads to increased productivity, which in turn leads to higher wages. Therefore, statement (C) is true, while options (A), (B), and (D) are false.

Which of the Following Statements Is TRUE