📚 Learning Guide
Understanding Opportunity Costs
easy

If Brazil has an absolute advantage in producing coffee over Peru, it means that Brazil should always produce coffee instead of wheat, regardless of opportunity costs.

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A

True

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False

Understanding the Answer

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Answer

Having an absolute advantage means that Brazil can produce more coffee than Peru using the same resources. However, this does not mean Brazil should only produce coffee without considering opportunity costs. Opportunity cost is what you give up when you choose one option over another. For example, if Brazil can produce either 10 units of coffee or 5 units of wheat, choosing to produce coffee means it gives up the chance to make those 5 units of wheat. Therefore, Brazil should weigh the benefits of producing coffee against the amount of wheat it could have produced, deciding based on which choice provides the most value for its resources.

Detailed Explanation

This statement is false. Other options are incorrect because This answer suggests that Brazil should only focus on coffee.

Key Concepts

Opportunity Costs
Comparative Advantage
Resource Allocation
Topic

Understanding Opportunity Costs

Difficulty

easy level question

Cognitive Level

understand

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