Poland requires 4 hours of labor to produce 1 ton of coal and 1 hour of labor to produce a bushel of wheat. The Czech Republic requires 6 hours of labor to produce 1 ton of coal and 1 hour of labor to produce a bushel of wheat. The international price of wheat must fall between which of the following two prices?
A) between 1/6 ton and 1/4 ton of coal per bushel of wheat
B) between 1/4 ton and 1/3 ton of coal per bushel of wheat
C) between 1/3 ton and 1.5 tons of coal per bushel of wheat
D) between 4 tons and 6 tons of coal per bushel of wheat

Question

Quizplus · Accepted Answer

The opportunity cost of wheat in Poland is 1/4 ton of coal per bushel (1 hour for wheat vs. 4 hours for coal), and in the Czech Republic, it is 1/6 ton of coal per bushel (1 hour for wheat vs. 6 hours for coal). The international price must fall between these opportunity costs.

Poland Requires 4 Hours of Labor to Produce 1 Ton