Assume That Two Countries (Home and Foreign) Each Produce Two

question 32

Multiple Choice

Assume that two countries (Home and Foreign) each produce two goods
(corn and wheat) under constant cost production.Home produces 0.5
Ton of corn or 1 ton of wheat with a day of labor.Without trade (in
Autarky) , Home's daily production is 20 tons of wheat and 10 tons of
Corn.What is Home's price of corn in autarky?

• A)0.5 ton of wheat per ton of corn
• B)20 tons of wheat per ton of corn
• C)10 tons of wheat
• D)2 tons of wheat

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Definitions:

Derived Demand

The demand for a factor of production or intermediate good that occurs as a result of the demand for another good or service.

Labor

Human effort used in the production of goods and services.

Marginal Product

Refers to the additional output resulting from using one more unit of a production input, holding all other inputs constant.

Capital Input

The amount of capital goods used in the production process, influencing the output.