Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Brazil decides to allocate more resources to coffee production because it can produce it faster than Peru.
B
Peru chooses to grow wheat instead of coffee, forgoing the coffee production that could have been sold at a higher price.
C
Both Brazil and Peru produce equal amounts of coffee and wheat without considering their production times.
D
Brazil invests in technology to reduce the time it takes to produce wheat, aiming to become a leader in both crops.
Understanding the Answer
Let's break down why this is correct
Answer
Opportunity cost is the idea that when you choose one option, you give up the chance to do something else. In international trade, this means that when a country decides to produce a certain good, it might have to stop making something else that could also be valuable. For example, if Brazil decides to focus on growing coffee instead of making clothes, the opportunity cost is the clothes they could have made and sold. This choice affects both countries since Peru might be better at producing clothes, so they could trade coffee for clothes, benefiting both. Understanding opportunity cost helps countries make smart choices about what to produce and trade.
Detailed Explanation
Peru chooses to grow wheat instead of coffee. Other options are incorrect because This option suggests Brazil is just focusing on coffee; This option shows both countries producing equally.
Key Concepts
Opportunity Costs
Comparative Advantage
Resource Allocation
Topic
Understanding Opportunity Costs
Difficulty
medium level question
Cognitive Level
understand
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