Scenario 20.1 Suppose Labor Productivity Differences Are the Only Determinants of Comparative

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. What is the opportunity cost of producing coffee in Chile?

A) Half a pound of sugar
B) Two-fifth of a pound of sugar
C) 2 pounds of sugar
D) One-third of a pound of sugar
E) 4 pounds of sugar

Correct Answer:

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