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

question 21

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
Suppose country A engages in free trade and the price of cloth increases from $3 per unit to $4 per unit. The price of wheat remains unchanged at $3 per unit. The wage rate and the rental rate change to _____ and _____ respectively._____.

• A)$3/8; $7/8
• B)$1; $5/3
• C)$5/3; $2/3
• D)$4/7; $3/7

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Definitions:

Liquid Diet

A diet that consists entirely of liquids and foods that turn to liquid at room or body temperature, often prescribed before or after certain medical procedures or for patients with digestive issues.

Optimal Nutrition

The attainment of a balance of nutrients necessary to support the body's health, growth, and energy needs without excess.

Metabolic Demands

The amount of energy (calories) the body requires to carry out physical and physiological processes.

Nutrients

Substances obtained from food that are essential for the maintenance of health and for growth and development.