A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:
A)labour costs and product prices are not related
B)there is no discernible relationship between wage rates and labour productivity
C)wage rates and labour productivity are directly related
D)wage rates and labour productivity are inversely related
E)wages are now higher in many low-income countries than they are in high-income countries

Question

Quizplus · Accepted Answer

Wage rates and labor productivity are directly related because higher productivity can lead to higher wages, as workers are able to produce more value. This relationship undermines the argument for trade barriers based on low foreign wages, as productivity differences can explain wage disparities.

A Major Difficulty with the Argument That Trade Barriers Are