Question

A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?a.U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union.b.there is little demand for cotton cloth in Vietnam and great demand in the U.S.c.Labor is more productive making cotton cloth with a mechanical loom than with a hand loom.d.Vietnam has a low-wage policy to make its textile industry more competitive in world markets.

Answer 1

Labor is more productive making cotton cloth with a mechanical loom than with a hand loom.

Explanation: First of all, we know that a machine is any device that makes work easier, faster and more precise.

Bearing that in mind, a mechanical loom will have a higher productive capacity when compared to a hand loom. Other advantages include;

• production of more complex designs
• higher quality of fabrics
• faster rate of production, etc.

From the advantages listed above, we can see that the worker in the United States will easily out perform the worker in Vietnam. The worker in the United States has the advantage of producing more cotton clothes, therefore he can sell more and earn more than the worker in Vietnam who produces very few cotton clothes.

Also, the worker in the United States can produce more complex designs with the mechanical loom. This feature will also drive up the price of the cotton clothes, and will increase the worker's earnings.