Question

Brazil, together with Australia, has a significant advantage in the production of iron ore because it mines and exports far more than most other countries. What kind of advantage does Brazil exhibit in this con?

a) Comparative weakness
b) Embargo
c) Comparative advantage
d) Trade deficit

Answer 1

Brazil exhibits a comparative advantage in the production of iron ore.

Step-by-step explanation:

When a country can produce a good at a lower opportunity cost than another country, we say that this country has a comparative advantage in that good. Comparative advantage is not the same as absolute advantage, which is when a country can produce more of a good. In the case of Brazil and Australia's advantage in the production of iron ore, Brazil exhibits a comparative advantage because it can mine and export iron ore more efficiently and at a lower opportunity cost compared to most other countries.