a)Assume that Home offshores production activities that are high-skilled intensive.Based on the graphs below, explain why offshoring results in an increase relative wage of high-skilled labour in both Home and Foreign country.

(a) Home Country (b) Foreign Country As the least skill-intensive activities New offshored tasks increase are offshored, Home relative the relative demand for demand for skilled labor increases. skilled labor in Foreign High-skilled/ High-skilled/ low-skilled Home supply low-skilled Foreign supply wage, W /W wage, wijwi Home demand Foreign demand High-skilled/low-skilled Labor, H/L High-skilled/low-skilled Labor, HYL"