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
A. Which factors are used intensively in the production of wheat and cloth?