Assume that Germany has higher labor productivity and higher wage levels than France.Germany can produce a commodity more cheaply than France if its productivity differential more than offsets its wage differential.

Question

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Labor productivity is a measure of how much output is produced per unit of labor input. If Germany has higher labor productivity than France, it can produce more output per unit of labor input, making it more efficient in production. This means that even if Germany has higher wage levels than France, it can still produce goods more cheaply due to its higher productivity, as long as the productivity differential more than offsets the wage differential.

Assume That Germany Has Higher Labor Productivity and Higher Wage