Suppose the World Price of Coffee Is $3 Per Pound

question 106

Short Answer

Suppose the world price of coffee is $3 per pound and Brazil's domestic price of coffee without trade is $2 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

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Definitions:

Centrally Planned Economy

An economic system where the government or central authority makes all decisions about the production and distribution of goods and services.

Market Economy

An economic system where supply and demand from consumers and businesses drive the production of goods and services and set prices.

Produce

To create, manufacture, grow, or bring into existence goods or services.

Socialist Country

A nation where the government owns and controls major industries and resources, aiming to distribute wealth and opportunities more evenly.