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.

Question

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.

Quizplus · Accepted Answer

Country X is relatively land-abundant, meaning it has more land relative to labor than other countries. In free trade, countries specialize in producing and exporting goods that they can produce relatively cheaply. Since Country X has a comparative advantage in producing bread (which requires more land), the price of bread relative to cheese will fall in Country X.

The Table Given Below Shows the Units of Land and Labor