Scenario 20

question 69

Multiple Choice

Scenario 20.1 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 20.1.Which of the following statements is true?

• A)Brazil has an absolute advantage in producing only coffee.
• B)Brazil has an absolute advantage in producing only sugar.
• C)Chile has an absolute advantage in the production of both coffee and sugar.
• D)Chile has an absolute advantage in producing only coffee.
• E)Brazil has an absolute advantage in the production of both coffee and sugar.

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