Scenario 34

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.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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