An average worker in Brazil can produce an ounce of soybeans in 20 minutes and an ounce of coffee in 60 minutes, while an average worker in Peru can produce an ounce of soybeans in 80 minutes and an ounce of coffee in 120 minutes.

Of the following four terms of trade, which is both (i) beneficial to both Brazil and Peru and (ii) most desirable from the perspective of Peru?

1 lb. of coffee for 3.25 lbs. of soybeans

1 lb. of coffee for 2.5 lbs. of soybeans

1 lb. of coffee for 1.75 lbs. of soybeans

1 lb. of coffee for 1 lb. of soybeans

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The opportunity cost of coffee in Brazil is 2060 033 lbs of soybean ... View the full answer