Suppose That a Country That Has a High Average Wage

question 28

Multiple Choice

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level.Which country can benefit?

• A)only the one with a low level of output per person.
• B)only the one with a high level of output per person.
• C)both
• D)neither

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Definitions:

Budget Constraint

The limits imposed on household choices by income, prices, and taxes, defining the combination of goods and services they can afford.

Income

Proceeds obtained, often periodically, from labor or investment returns.

Utility

A measure of satisfaction or happiness that consumers derive from the consumption of goods and services.

Perfect Substitutes

Two goods that could be used in place of each other with no loss of utility to the consumer.