(Figure: A Firm's Production With and Without Offshoring I) Assuming skilled workers are needed for R&D and unskilled workers are needed for components, if there is an increase in the price for research and development products, this firm will _____ those products, the demand for _____ will increase, the wages of these workers will rise, and the price line in the graph will _____.
A) import; unskilled workers; become steeper
B) export; skilled workers; become flatter
C) neither import nor export; both workers in the same proportion; not change
D) import; unskilled workers; become flatter

Question

(Figure: A Firm's Production With and Without Offshoring I) Assuming skilled workers are needed for R&D and unskilled workers are needed for components, if there is an increase in the price for research and development products, this firm will _____ those products, the demand for _____ will increase, the wages of these workers will rise, and the price line in the graph will _____. 
A) import; unskilled workers; become steeper 
B) export; skilled workers; become flatter 
C) neither import nor export; both workers in the same proportion; not change 
D) import; unskilled workers; become flatter

Quizplus · Accepted Answer

If there is an increase in the price for research and development products, the firm will produce more components and export them, which will increase the demand for skilled workers who are needed for R&D. This will result in an increase in the wages of skilled workers, which will cause the price line in the graph to become flatter because the firm will need to pay more to produce the same level of output. Therefore, option B is the best choice.

(Figure: a Firm's Production with and Without Offshoring I) Assuming