Nemedia and Aquilonia have just started to trade with each other.Nemedia exports goods produced with skilled labor and imports goods made with unskilled labor from Aquilonia.Over time,we would expect that the wages of skilled labor in Nemedia will
A)rise, and the wages of unskilled labor in Nemedia will fall.
B)fall, and the wages of unskilled labor in Nemedia will rise.
C)rise, and the wages of unskilled labor in Nemedia will rise.
D)fall, and the wages of unskilled labor in Nemedia will fall.

Question

Quizplus · Accepted Answer

As Nemedia begins to export goods produced with skilled labor, the demand for skilled labor will increase, causing wages for skilled labor to rise. On the other hand, as Nemedia imports goods made with unskilled labor from Aquilonia, the demand for unskilled labor in Nemedia will decrease, causing wages for unskilled labor to fall. Therefore, we would expect option A to be the correct answer.

Nemedia and Aquilonia Have Just Started to Trade with Each