24. Table 2 U.S. U.K Wheat/hour 6 1 Cloth/hour 2 With reference to table 2 above,...

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24. Table 2 U.S. U.K Wheat/hour 6 1 Cloth/hour 2 With reference to table 2 above, let the wage be $6 in the U.S and £1.8 in t

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Answer 1

Answer #1

The US can make 6 units of wheat in 1 hour of labour.

And the 1 hour cost 6$.

So 1 wheat unit cost=cost of 1 hour labour/ number of units in 1 hour of labour=6/6=1.

Because labour cost is fixed at 6$,so at competitive equilibrium p=MC,so MC of 1 wheat is $1.

So p=MC=$1.

And same for clothes,.US can make 3 unit of clothes in 1 hour of labour

1clothes unit cost or MC of clothes=6/3=2$

P=MC=2$

So option A is correct

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Answer 2

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