Question: It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to India, dees the logic of


It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to India, dees the logic of the Ricardian model. Let's examine if this is actually the case. The following table presents information on labor productivity in computer component production and call center services in the United States and India. Assume that the United States has an absolute advantage in both. To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to India, and indicate the good in which each country has a comparative advantage. Production per Employee Computer Components Call Center Services Cauntry (Units per haur) (Phone calls per hour) Comparative Advantage The United States 14 7 v India 2 v v Does the observed pattern of outsourcing from the United States to india, where India exports v , support the logic of the Ricardian model? Yes NO
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