Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Brazil, because it takes more time to produce coffee there
B
Peru, because it has lower opportunity costs for coffee production
C
Both have the same advantage since wheat takes the same time in both countries
D
Neither, as comparative advantage does not apply to these goods
Understanding the Answer
Let's break down why this is correct
Answer
To determine which country has a comparative advantage in coffee, we need to look at the opportunity costs of producing coffee in each country. For Brazil, producing coffee takes 12 hours, during which it could have produced 3 units of wheat, since it can produce wheat in 4 hours. This means Brazil's opportunity cost for one unit of coffee is 3 units of wheat. In Peru, the opportunity cost for producing one unit of coffee is only 1 unit of wheat, because it can produce coffee in 6 hours and wheat in 4 hours. Since Peru gives up less wheat to produce coffee compared to Brazil, Peru has a comparative advantage in coffee.
Detailed Explanation
Peru has a lower opportunity cost for coffee. Other options are incorrect because This answer misunderstands opportunity cost; This option misses the point of comparative advantage.
Key Concepts
Opportunity Costs
Comparative Advantage
Resource Allocation
Topic
Understanding Opportunity Costs
Difficulty
easy level question
Cognitive Level
understand
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