In the context of production wages, what is the correct equation for the price of cheese? A) $P_C = w_W a_LC$ B) $P_C = w_C a_LW$ C) $P_C = w_W a_LW$ D) $P_C = w_C a_LC$
Understand the Problem
The question is asking for the correct equation that represents the price of cheese in the context of production wages. It is presenting multiple choice options involving price ($P_C$), wages ($w_W$, $w_C$), and labor coefficients ($a_LC$, $a_LW$). To solve it, we need to analyze the offered equations to determine which one correctly depicts the relationship stated.
Answer
D) $P_C = w_C a_LC$
The final answer is D) $P_C = w_C a_LC$
Answer for screen readers
The final answer is D) $P_C = w_C a_LC$
More Information
In the context of production wages and pricing, the price of a good (in this case, cheese) is typically determined by the wage rate for the workers in that industry and the labor required to produce it. Therefore, the price of cheese is derived from the wage rate in the cheese industry (w_C) and the labor required for cheese production (a_LC).
Tips
A common mistake is confusing the wages and labor associated with different industries. Ensure the wage and labor pertain to the same industry (e.g., cheese).
Sources
- Economics 181: International Trade Assignment # 1 Solutions - eml.berkeley.edu
- The Ricardian Theory of Comparative Advantage - resources.saylor.org
AI-generated content may contain errors. Please verify critical information
