Read the scenario and answer the following seven questions:
1. If a computer project takes 6 months, how much does it cost in terms of a computer programmer salary to complete the project in the United States?
2. If that same project takes two years to complete in India, how much does it cost in terms of a computer programmer salary to complete the project in India?
3. Which country has an absolute advantage? Why? Provide evidence to support answer.
4. Which country has a comparative advantage? Why?
5. If the average annual salary of a computer programmer in the United States were $100,000, which country would have the comparative advantage? why?
6. What are the advantages for a country to specialize?
7. How do trade restrictions affect comparative advantage?
Scenario:
The average salary of a computer programmer is $70,000 in the United States. A computer programmer with the same skill level costs $20,000. A company is considering outsourcing the work overseas to India. It takes the computer programmer based in the United States 6 months to complete the project. It takes the computer programmer based in India 2 years to complete the same project.