Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Question

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If the domestic price of coffee in Guatemala is higher than the world price, this suggests that other countries have a comparative advantage over Guatemala in the production of coffee. As a result, it would be more efficient for Guatemala to import coffee from other countries at the lower world price rather than continue producing coffee domestically at a higher cost. Therefore, Guatemala will import coffee. Choice A and B imply that Guatemala has a comparative advantage in coffee production, which contradicts the premise of the question. Choice C suggests that Guatemala will export coffee, which is unlikely given that the domestic price is higher.

Assume for Guatemala That the Domestic Price of Coffee Without