Suppose Country A, a Labor-Abundant Country, Produces Only Wheat and Cloth

question 59

Multiple Choice

Suppose country A, a labor-abundant country, produces only wheat and cloth. The following equations illustrate the prices and costs of wheat and cloth in the country, where the numbers indicate the amounts of labor and land needed to produce a unit of wheat and cloth. 'w' is the wage rate and 'r' is the rental rate of land. Price of wheat = 1w + 2r
Price of cloth = 2w + 1r
If the initial prices of wheat and cloth are $3 per unit then:

• A)both the wage rate and the rental rate are equal to $1.
• B)the wage rate and the rental rate are $1 and $2 respectively.
• C)the wage rate and the rental rate are $2 and $3 respectively.
• D)both the wage rate and the rental rate are equal to $2.

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Definitions:

Sundiata

A legendary prince and the founder of the Mali Empire in West Africa, celebrated as a hero in the epic "Sundiata Keita".

Kingdom of Mali

A powerful and wealthy West African empire during the 13th to 16th centuries, renowned for its cultural achievements and its significant role in the trans-Saharan trade.

Legendary Ruler

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Ghana's Throne

Symbolic representation of the leadership or monarchy of Ghana, often associated with the historical significance of the Ashanti Empire and its influence in the region.