📚 Learning Guide
Understanding Opportunity Costs
easy

Order the steps in determining opportunity costs when evaluating the production of coffee and wheat in Brazil and Peru.

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Learning Path
Learning Path

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Choose the Best Answer

A

Identify the time required to produce each good in both countries.

B

Calculate the opportunity cost for each country based on the production times.

C

Determine which country has an absolute advantage in producing each good.

D

Decide which good each country should specialize in based on the comparative advantages.

Understanding the Answer

Let's break down why this is correct

Answer

To determine opportunity costs when evaluating the production of coffee and wheat in Brazil and Peru, you first need to understand what opportunity cost means. It is the value of the next best alternative that you give up when you choose one option over another. For example, if Brazil decides to produce more coffee instead of wheat, the opportunity cost is the amount of wheat that could have been produced instead. Next, you would analyze the resources available in each country, like land and labor, to see how efficiently they can produce each crop. Finally, you compare these costs between the two countries to see where each one has a comparative advantage, helping to make informed decisions about production.

Detailed Explanation

First, you need to find out how long it takes to make each product in both countries. Other options are incorrect because Some might think you should calculate costs right away; People often confuse absolute advantage with opportunity cost.

Key Concepts

Opportunity Costs
Comparative Advantage
Resource Allocation
Topic

Understanding Opportunity Costs

Difficulty

easy level question

Cognitive Level

understand

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