The table given below shows the number of labor hours required to produce 1 gallon of wine and 1 pound of cheese in the U.S. and France. What is the relative price of cheese (the price of cheese in terms of wine) in France under no trade situation? $$\begin{array} { l c c }
\hline \text { Labor hours to make: } & \text { In the United States } & \text { In France } \
\hline \text { 1 gallon of wine } & 4.00 & 1.00 \
\text { 1 pourd of cheese } & 1.00 & 2.00 \
\hline
\end{array}$$
A)2 gallons of wine per pound
B)1 gallon of wine per pound
C)0.5 gallons of wine per pound
D)0.25 gallons of wine per pound

Question

The table given below shows the number of labor hours required to produce 1 gallon of wine and 1 pound of cheese in the U.S. and France. What is the relative price of cheese (the price of cheese in terms of wine) in France under no trade situation? $$\begin{array} { l c c } 
\hline \text { Labor hours to make: } & \text { In the United States } & \text { In France } \
\hline \text { 1 gallon of wine } & 4.00 & 1.00 \
\text { 1 pourd of cheese } & 1.00 & 2.00 \
\hline
\end{array}$$
A)2 gallons of wine per pound
B)1 gallon of wine per pound
C)0.5 gallons of wine per pound
D)0.25 gallons of wine per pound

Quizplus · Accepted Answer

In France, it takes 2 labor hours to produce 1 pound of cheese and 1 labor hour to produce 1 gallon of wine. Therefore, the relative price of cheese in terms of wine is 2 gallons of wine per pound of cheese (2 hours for cheese / 1 hour for wine).

The Table Given Below Shows the Number of Labor Hours