Micro Unit 1, Question 10- Comparative Advantage

The video tutorial explains the concept of comparative advantage using Brazil and Peru as examples. It details how to calculate per unit opportunity cost to determine which country has a comparative advantage in producing sugar and wheat. Brazil has a comparative advantage in sugar, while Peru has it in wheat. The video also clarifies that Peru does not have an absolute advantage in sugar production. It concludes by highlighting that both countries can benefit from trade if the terms are favorable.

Why does Peru not have an absolute advantage in the production of sugar?

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How do the terms of trade need to be structured for both Brazil and Peru to benefit?

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