Question

​"It has been all downhill for the West since China entered the world​ market; we just​ can't compete with hundreds of millions of people willing to work for almost​ nothing." Assuming that the statement above fails to connect wages and​ productivity, which of the following statements is​ true? A. It is cheaper to produce all goods in China because wages are lower there. B. It is cheaper to produce some goods in the U.S. because an absolute advantage exists here. C. It is cheaper to produce all goods in China because technology is more advanced there. D. It is cheaper to produce some goods in the U.S. because productivity is higher here. E. It is cheaper to produce all goods in China because more workers are available there.

Answer 1

Answer:

D. It is cheaper to produce some goods in the U.S. because productivity is higher here.

Explanation:

If the statement ​"It has been all downhill for the West since China entered the world​ market; we just​ can't compete with hundreds of millions of people willing to work for almost​ nothing." Fails to connect wages and productivity, it means that despite China having many people willing to work for low wages it does not mean they are more productive.

Productivity is defined as how effectively a production process is. It is the ratio between output and input used.

If China has low productivity with the large workforce it has, it will be cheaper to produce goods in the United States that has a higher productivity.

The United States will be able to maximise inputs used in the production process to give higher output.