Suppose there are several countries that are efficient at producing coffee beans and Brazil is one of those countries. While Brazil is efficient at producing coffee beans, it is inefficient at producing electronics. Because of this, Brazil sells its coffee beans to other countries and buys electronics from other countries. This scenario exemplifies the concept of
A) supply and demand.
B) absolute advantage.
C) a monopoly.
D) exchange controls.
E) comparative advantage.

Question

Quizplus · Accepted Answer

This is an example of comparative advantage, which occurs when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.

Suppose There Are Several Countries That Are Efficient at Producing