Faced with the Evidence of Poor Working Conditions and Low

question 29

Multiple Choice

Faced with the evidence of poor working conditions and low wages in the border maquiladoras, economists

• A) shrug their shoulders and ignore the issue.
• B) agree that trade theory is thus proven hollow and internally inconsistent.
• C) argue that U.S. consumers should not consume lettuce.
• D) argue that the poor conditions and low wages are actually improvements for the Mexican workers, and may be cited as gains-from-trade.
• E) argue that Mexico's generally high overall productivity offsets these conditions.

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Definitions:

Corporate Tax Rate

The percentage of a corporation's income that is seized by the government as tax.

Depreciation

The reduction in value of an asset over time, particularly in respect of wear and tear.

Expected Return

Expected return is the anticipated value or profit generated by an investment in the future, considering the potential risks and rewards.

Market Portfolio

A theoretical portfolio comprising all assets in the market, with each asset weighted by its market capitalization, representing the entire stock market's performance.