One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

Question

Mathew Klein

Business

3 February, 00:07

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

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Answers (1)

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Darwin Klein · Answer 1

Comparative advantage

Explanation:

This concept of economics is comparative advantage that means one country has advantage of producing same product at lower cost than other. In this question China has comparative advantage over USA,

This may be due to different reasons.

1. Population of China is greater than USA, that is why employees are willing to work on low salaries in China as compared to salaries are offered in the US.

2. China is comparatively better in manufacturing industry as of with USA.