If 1 unit each of land and labor are used to make product A (costing a total of $10), and 1 unit of land and 3 units of labor are used to make product B (costing a total of $22), then the price of:
A)land is $6 and the price of labor is $4.
B)labor is $6 and the price of land is $4.
C)land is $8 and the price of labor is $2.
D)each input is $4.
E)labor is 3 times the price of land, but the exact amount cannot be determined from the above.

Question

Quizplus · Accepted Answer

Let the price of land be L and the price of labor be K.
From the given information,
L + K = 10    --- equation 1
L + 3K = 22    --- equation 2

Subtracting equation 1 from equation 2, we get:
2K = 12
K = 6

Plugging K = 6 into equation 1, we get:
L + 6 = 10
L = 4

Therefore, the price of land is $4 and the price of labor is $6. So, the best choice is B.

If 1 Unit Each of Land and Labor Are Used