Question

Brazil and France both want to gain profits by engaging in international trade. The climatic conditions in Brazil are perfect for cultivating coffee. Climatic conditions in France are not that suitable for cultivating coffee. France climate can support wheat cultivation. Which of these sentences are true with respect to the concept of comparative advantage?
A.
France should produce coffee and export it to Brazil.
B.
Brazil should produce wheat and export it to France.
C.
Brazil should produce coffee and export it to France.
D.
France should import both coffee and wheat from Brazil.

Answer 1

Answer:

C. Brazil should produce coffee and export it to France

Explanation:

Since Brazil is the country that has excellent conditions for producing coffee, it should use it in its advantage. The coffee is a highly demanded product on the market, and billions of people use it every day. France on the other hand, doesn't have good conditions for production of coffee, but it is a very large consumer of it, so it has to import large quantities of it. Brazil should use the high demand by France for coffee, produce lot of it, and export it to this country, thus Brazil will get good profit, while France will get the product it wants.