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We look at two countries, the US and China, that trade with each other. There are...

  1. We look at two countries, the US and China, that trade with each other. There are two factors of production, namely high-skilled labor and low-skilled labor. The US is relatively abundant in high-skilled labor and China is relatively abundant in low-skilled labor. Trade between these two countries will

    A.

    benefit high-skilled labor in both countries.
    B.

    benefit low-skilled labor in both countries.
    C.

    benefit high-skilled labor in the US and low-skilled labor in China.
    D.

    benefit low-skilled labor in the US and high-skilled labor in China.
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Answer #1

Answer : (c) benefit high skilled labour in the US and low skilled labour in China

Trade happening between US and China which has more high skilled labour and low skilled labour respectively will benefit the exchange of goods manufactured by the respective labor. In case of China where low skilled labour intensive goods are manufactured cheaply will get more work due to the demand for such goods in US.

Likewise, the high skilled labour intensive goods that are less abundant in China will cause more demand for such goods in China. As a result more export orders will get them more work hours. Thus in turn, trade between these countries will help the labor grow.

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