Suppose Country A, a labor-abundant country, produces only drink and furniture. The following equations illustrate the prices and costs of drink and furniture in the country, where the numbers indicate the amounts of labor and land needed to produce a unit of drink and furniture. 'W' is the wage rate and 'r' is the rental rate of land.Price of drink = 1w + 2rPrice of furniture = 2w + 1rAccording to this information, which of the following statements is true?
A. Labor is used relatively intensively in the production of furniture.
B. The opportunity cost of producing furniture is higher than the opportunity cost of producing drink in Country A.
C. The inputs are used in the same proportion in producing both commodities.
D. The land to labor ratio in the production of furniture is higher than that in the production of drink.
Answer: A
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