If One Country's Wage Level Is Very High Relative to the Other's

question 65

Multiple Choice

If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios) ,then if they both use the same currency

• A) neither country has a comparative advantage.
• B) only the low wage country has a comparative advantage.
• C) only the high wage country has a comparative advantage.
• D) consumers will still find trade worth while from their perspective.
• E) it is possible that both will enjoy the conventional gains from trade.

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Definitions:

Company

An enterprise instituted by multiple persons who collaborate to oversee and execute operations in a business, encompassing both commercial and industrial sectors.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available for the business's day-to-day operations.

Year 2

This typically refers to the second year in a multi-year financial analysis or projection.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers, indicating the efficiency of the company's credit and collection policies.