If Japanese Workers Receive Lower Wages in the Production of Autos

question 5

Multiple Choice

If Japanese workers receive lower wages in the production of autos than do American workers:

• A) Japan will have a comparative advantage in the production of autos
• B) Japan will have an absolute advantage in the production of autos
• C) Production costs will be lower in Japan than in the U.S.
• D) Production costs could be lower in the U.S.if American labor productivity is higher than the Japanese

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Definitions:

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A contract in which one party makes a promise in exchange for the other party's performance of a specific task, rather than a promise in return.