Initially, Workers in the Shoe Industry and the Computer Industry

question 74

Multiple Choice

Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, wages in the shoe industry ________ and wages in the computer industry ________.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

BATNA

Optimal Alternative to a Negotiated Agreement; the best possible course of action that a party can pursue if negotiations break down and no agreement is achieved.

Modified Integrative Bargaining

A negotiation strategy that seeks collaborative solutions, blending competitive and cooperative approaches.

Distributive Bargaining

A negotiation strategy that views the resources as fixed and aims to divide them between parties, often resulting in a win-lose situation.

Integrative Bargaining

A negotiation strategy where all parties collaborate to find mutually beneficial solutions, focusing on the interests rather than the positions of the parties involved.