Which of the following appropriately applies the law of comparative advantage?
a. Countries with small amounts of labor relative to capital should specialize in producing labor-intensive commodities.
b. Since Mexican labor is cheaper than American labor, trade between the countries results in exploitation of American workers.
c. Since workers in countries such as the United States utilize larger amounts of capital than workers in less developed nations, trade between capital-rich and capital-poor nations results in the exploitation of labor in the less developed countries.
d. Countries that are low cost producers of agricultural products should trade those products for goods they can produce only at a high opportunity cost.
D
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Refer to the given information. Zippo has a:
The plus items below are “export-type” entries and the minus items are “import-type” entries in the balance of payments for the hypothetical country of Zippo.
A. current account deficit.
B. capital account deficit.
C. balance of payments deficit.
D. trade surplus on goods and services.
Consider a labor market in which employers discriminate against African Americans. Comparing the labor market equilibrium with no discrimination to the equilibrium with discrimination,
A. The African American wage rate is higher without discrimination than with discrimination. B. The number of African American workers hired is lower without discrimination than with discrimination. C. The white wage rate is higher without discrimination than with discrimination. D. The African American wage rate and the white wage rate are equal with and without discrimination; only the number of workers differs.