Question

Which of the following statements best illustrates how comparative advantage influences specialization?
A.
A Mexican company builds several computer manufacturing facilities in Mexico City, even though few residents of this city are trained in computer manufacturing.
B.
Brazil's climate is especially favorable for growing coffee, and Brazil is the world’s leading producer of coffee.
C.
A movie director chooses to film his new movie in Phoenix, AZ.
D.
Although Cuba's climate is good for growing tobacco, many Cubans have decided to grow corn instead because of the demand for biofuels.

Please select the best answer from the choices provided.

A
B
C
D

Answer 1

B

Explanation: Comparative advantage leads countries to specialize in goods they can produce at lower opportunity cost. Brazil’s favorable climate gives it a natural cost advantage in coffee production, so it specializes and becomes a leading producer. The other options do not clearly illustrate specialization based on comparative (opportunity-cost) advantage.