Assume that two countries (Home and Foreign) each produce two goods
(corn and wheat) under constant cost production.Home produces 0.5
Ton of corn or 1 ton of wheat with a day of labor.Without trade (in
Autarky), Home's daily production is 20 tons of wheat and 10 tons of
Corn.What is Home's price of corn in autarky?
A)0.5 ton of wheat per ton of corn
B)20 tons of wheat per ton of corn
C)10 tons of wheat
D)2 tons of wheat

Question

Quizplus · Accepted Answer

In autarky, the opportunity cost of producing 1 ton of corn is 2 tons of wheat, as Home can produce 0.5 ton of corn or 1 ton of wheat with a day of labor.

Assume That Two Countries (Home and Foreign) Each Produce Two