Initially, Workers in the Shoe Industry and the Computer Industry

Multiple Choice

Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, wages in the shoe industry ________ and wages in the computer industry ________.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease