(Table: Labor Requirements) The table gives U.S. and Indian labor requirements (hours per unit of output) needed in each of four activities to produce the final product. Suppose that wages of unskilled and skilled workers are $10 and $20 in the United States and $1 and $5 in India. Now suppose that the United States and India engage in offshoring. What will happen to the relative wage for skilled labor in each country?
A) The Indian relative wage for skilled labor will increase, and the U.S. relative wage of skilled labor will decrease.
B) The Indian relative wage for skilled labor will decrease, and the U.S. relative wage of skilled labor will increase.
C) Both the Indian and U.S. relative wages for skilled labor will increase.
D) Both the Indian and U.S. relative wages for skilled labor will decrease.

Question

(Table: Labor Requirements) The table gives U.S. and Indian labor requirements (hours per unit of output) needed in each of four activities to produce the final product. Suppose that wages of unskilled and skilled workers are $10 and $20 in the United States and $1 and $5 in India. Now suppose that the United States and India engage in offshoring. What will happen to the relative wage for skilled labor in each country? 
A) The Indian relative wage for skilled labor will increase, and the U.S. relative wage of skilled labor will decrease. 
B) The Indian relative wage for skilled labor will decrease, and the U.S. relative wage of skilled labor will increase. 
C) Both the Indian and U.S. relative wages for skilled labor will increase. 
D) Both the Indian and U.S. relative wages for skilled labor will decrease.

Quizplus · Accepted Answer

The Answer of (Table: Labor Requirements) The table gives U.S. and Indian labor requirements (hours per unit of output) needed in each of four activities to produce the final product. Suppose that wages of unskilled and skilled workers are $10 and $20 in the United States and $1 and $5 in India. Now suppose that the United States and India engage in offshoring. What will happen to the relative wage for skilled labor in each country? 
A) The Indian relative wage for skilled labor will increase, and the U.S. relative wage of skilled labor will decrease. 
B) The Indian relative wage for skilled labor will decrease, and the U.S. relative wage of skilled labor will increase. 
C) Both the Indian and U.S. relative wages for skilled labor will increase. 
D) Both the Indian and U.S. relative wages for skilled labor will decrease.

(Table: Labor Requirements) the Table Gives U