The table given below shows the number of labor hours required to produce 1 umbrella and 1 bushel of corn in the U.K. and the Rest of the World. If the U.K. and the Rest of the World begin to trade with each other, the international price of corn will lie between _____ and _____. $$\begin{array} { | c | c | c | }
\hline \text { Labor hours to make: } & \text { In the Urited Kingdorn } & \text { In the Rest of the World } \
\hline \text { l umbrella } & 3.00 & 2.00 \
\hline \text { 1 bushel of corn} & 1.00 & 0.25 \
\hline
\end{array}$$
A)1/3 of an umbrella per bushel of corn; 3 umbrellas per bushel of corn
B)3 umbrellas per bushel of corn; 8 umbrellas per bushel of corn
C)1/8 of an umbrella per bushel of corn; 1/3 of an umbrella per bushel of corn
D)1/8 of an umbrella per bushel of corn; 8 umbrellas per bushel of corn

Question

The table given below shows the number of labor hours required to produce 1 umbrella and 1 bushel of corn in the U.K. and the Rest of the World. If the U.K. and the Rest of the World begin to trade with each other, the international price of corn will lie between _____ and _____. $$\begin{array} { | c | c | c | } 
\hline \text { Labor hours to make: } & \text { In the Urited Kingdorn } & \text { In the Rest of the World } \
\hline \text { l umbrella } & 3.00 & 2.00 \
\hline \text { 1 bushel of corn} & 1.00 & 0.25 \
\hline
\end{array}$$
A)1/3 of an umbrella per bushel of corn; 3 umbrellas per bushel of corn
B)3 umbrellas per bushel of corn; 8 umbrellas per bushel of corn
C)1/8 of an umbrella per bushel of corn; 1/3 of an umbrella per bushel of corn
D)1/8 of an umbrella per bushel of corn; 8 umbrellas per bushel of corn

Quizplus · Accepted Answer

The international price of corn will lie between the opportunity costs of producing corn in both countries. In the U.K., the opportunity cost of producing 1 bushel of corn is 1/3 of an umbrella (since 3 hours are needed for 1 umbrella and 1 hour for 1 bushel of corn). In the Rest of the World, the opportunity cost of producing 1 bushel of corn is 1/8 of an umbrella (since 2 hours are needed for 1 umbrella and 0.25 hours for 1 bushel of corn). Therefore, the international price of corn will lie between 1/8 of an umbrella per bushel of corn and 1/3 of an umbrella per bushel of corn.

The Table Given Below Shows the Number of Labor Hours