Country ACountry BTextiles44Soybeans45The numbers in the table indicate the number of hours required to produce 1 unit of the goodWhat is pT in Autarky?O 1 in Country A4/5 in Country B4wA in Country A4wB in Country BO4 in Country A4 in Country BO 1 in Country A5/4 in Country B

Answered: Country A Textiles 4 Soybeans 4 5 The…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Country A
Country B
Textiles
4
4
Soybeans
4
5
The numbers in the table indicate the number of hours required to produce 1 unit of the good
What is pT in Autarky?
O 1 in Country A
4/5 in Country B
4wA in Country A
4wB in Country B
O4 in Country A
4 in Country B
O 1 in Country A
5/4 in Country B

Expert Solution

Step 1

Opportunity cost and relative price:

The value of alternative opportunities foregone and sacrificed to acquire one unit of a commodity is known as the opportunity cost of that commodity in terms of the foregone alternatives.

Whereas, the relative price of one good expresses the price in terms of the other good.

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