The Table Given Below Shows the Units of Land and Labor

question 2

Multiple Choice

The table given below shows the units of land and labor required to produce a unit of bread and cheese respectively in country X. If country X is a relatively land-abundant country, the opening up of free trade would cause the price of bread relative to cheese to: $$\begin{array} { | c | c | c | } \hline & \text { 1 urit of Bread } & \text { 1 unit of Cheese } \\\hline \text { Labor Input } & 5 \text { units } & 20 \text { units } \\\hline \text { Land Input } & 4 \text { units } & 10 \text { units } \\\hline\end{array}$$

• A)rise.
• B)fall.
• C)stay the same.
• D)initially rise but fall afterward.

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Definitions:

Efficient Price

A market condition where prices reflect all available information and resources are allocated to their most valuable use.

Efficient Quantity

The level of output where the marginal benefit to consumers equals the marginal cost of producing an additional unit, leading to optimal resource allocation.

Economic Efficiency

A condition in which all resources are distributed in the most efficient manner, ensuring that every individual or organization benefits optimally, with minimal waste and inefficiencies.