If Brazil has a comparative advantage in producing rubber and trade in rubber is allowed:
A)Brazil will become an importer of rubber
B)Brazil will become an exporter of rubber
C)Brazil could become either an exporter or an importer of rubber
D)it is impossible to determine whether Brazil will become an importer or an exporter of rubber without additional information about rubber prices

Question

Quizplus · Accepted Answer

If Brazil has a comparative advantage in producing rubber, it can produce rubber at a lower opportunity cost than other countries. This means that Brazil can produce rubber more efficiently than other countries, and therefore it will have a lower cost of production. This will make it profitable for Brazil to export rubber to other countries, as it can sell the rubber at a competitive price in the global market. Therefore, if trade in rubber is allowed, Brazil will become an exporter of rubber.

If Brazil Has a Comparative Advantage in Producing Rubber and Trade