1.If an economist observes that the average wage rate in Portugal is lower than is the...

1.If an economist observes that the average wage rate in Portugal is lower than is the average wage rate in Switzerland, the economist explains that the most likely cause of this difference in average wage rates is that

A. worker productivity in Portugal is higher than it is in Switzerland

b.worker productivity in Portugal is lower than it is in Switzerland

c. Switzerland likely has much stronger labor unions than does Portugal

d.Swiss workers are better protected than are Portuguese workers, by tariffs, from foreign competition

Expert Solution

Productivity impacts the wage rate.

Higher the productivity, higher would be the wage rate and vice versa.

So,

If an economist observes that the average wage rate in Portugal is lower than is the average wage rate in Switzerland then the most likely cause of this difference in average wage rates is that worker productivity in Portugal is lower than it is in Switzerland.

Hence, the correct answer is the option (b).

Rahul Sunny answered 2 years ago

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