Suppose Country A, a Labor-Abundant Country, Produces Only Wheat and Cloth

Multiple Choice

Suppose country A, a labor-abundant country, produces only wheat and cloth. The following equations illustrate the prices and costs of wheat and cloth in the country, where the numbers indicate the amounts of labor and land needed to produce a unit of wheat and cloth. 'w' is the wage rate and 'r' is the rental rate of land. Price of wheat = 1w + 2r
Price of cloth = 2w + 1r
If the initial prices of wheat and cloth are $3 per unit then:

A) both the wage rate and the rental rate are equal to $1.
B) the wage rate and the rental rate are $1 and $2 respectively.
C) the wage rate and the rental rate are $2 and $3 respectively.
D) both the wage rate and the rental rate are equal to $2.