Scenario 34

question 15

Multiple Choice

Scenario 34.1 Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar.In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day.In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar.
Refer to Scenario 34.1.Which of the following statements is true?

• A)Brazil has a comparative advantage in producing coffee.
• B)Brazil has a comparative advantage in producing both coffee and sugar.
• C)Chile has a comparative advantage in producing both coffee and sugar.
• D)Neither Chile nor Brazil has a comparative advantage in producing coffee.
• E)Brazil has a comparative advantage in producing sugar.

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Definitions:

Brokers

An intermediary who represents clients who buy or sell specialized goods or seasonal products.

Wholesalers

An intermediary who buys products in bulk from producers and resells them to other wholesalers or to retailers.

Retailers

An intermediary who sells products to the ultimate consumer.

Location Type

The classification of a place based on its characteristics, purpose, or usage, such as residential, commercial, or industrial.