Assume that two goods exchange according to the average amount of labor that goes into producing each of them. If it takes 2 hours to produce a pie and 1 hour to produce a cake, then if Sam has 1 pie to sell
A) he could exchange his pie for 2 cakes
B) he could exchange is pie for ½ of a cake
C) he could exchange his pie for 1 cake.
D) he could exchange his pie for 2 other pies.

Question

Quizplus · Accepted Answer

Given the labor theory of value, a pie, requiring 2 hours of labor, would exchange for 2 cakes if each cake requires 1 hour of labor.

Assume That Two Goods Exchange According to the Average Amount