If Relative Wages for Unskilled Workers Are Lower in a Foreign

question 115

Multiple Choice

If relative wages for unskilled workers are lower in a foreign country, we would expect:

• A) the home country to offshore tasks that require skilled workers.
• B) the foreign country to offshore tasks that require unskilled workers.
• C) the home country to offshore tasks that require unskilled workers.
• D) trade to be harmful for the home country.

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Definitions:

Book Value

is the net value of a company's assets found on its balance sheet, subtracting liabilities from the total value of assets.

Resell

The act of selling something that one has purchased to another buyer, often for a price higher than the original purchase price.

Equipment Cost

Equipment cost refers to the purchase price and associated expenses of acquiring equipment for business operations, including delivery and installation fees.

Depreciation Tax Shield

The reduction in taxable income that results from the allowance for depreciation expenses, lowering tax liability.