A farmer in Brazil can produce either 10 tons of coffee or 5 tons of wheat in a month. A farmer in Peru can produce either 12 tons of coffee or 6 tons of wheat in the same time frame. If Brazil decides to produce only coffee, what is the opportunity cost in terms of wheat production for Brazil, and how might this influence trade decisions with Peru?

The opportunity cost for Brazil when it decides to produce only coffee is the amount of wheat it forgoes. Since Brazil can produce 5 tons of wheat in a month, choosing to produce only coffee means it gives up this wheat production. This concept is important because it helps the farmer understand what they sacrifice by focusing on one crop over another. If Brazil specializes in coffee and produces 10 tons instead of wheat, it might trade some of that coffee with Peru for wheat, which could be beneficial since Peru has a different production capacity. This trade decision allows both countries to benefit from their strengths, ultimately leading to a more efficient use of resources.