If relative wages for unskilled workers are lower in a foreign country, we would expect:
A) the home country to offshore tasks that require skilled workers.
B) the foreign country to offshore tasks that require unskilled workers.
C) the home country to offshore tasks that require unskilled workers.
D) trade to be harmful for the home country.

Question

Quizplus · Accepted Answer

If relative wages for unskilled workers are lower in a foreign country, it is likely that the home country will offshore tasks that require unskilled workers to take advantage of the lower wages in the foreign country. This will lead to job losses for unskilled workers in the home country but may also result in cost savings for firms that can be passed on to consumers. Offshoring skilled tasks would not necessarily be affected by relative wages for unskilled workers. Trade being harmful for the home country is not a logical conclusion based on this information alone.

If Relative Wages for Unskilled Workers Are Lower in a Foreign