Question

Complete each sentence about the scenario you just explored.

In the previous example, the United States and Brazil were
efficient when they specialized.

Brazil chose to specialize in the production of bananas because it
in producing it.

The United States and Brazil
when they specialize.

Answer 1

In the previous example, the United States and Brazil were both more efficient when they specialized.

Brazil chose to specialize in the production of bananas because it had a comparative advantage (a lower opportunity cost) in producing them.

The United States and Brazil both gain from trade when they specialize (they can consume more than without specialization).