producing wheat, it would be producing at point A. If however it had devoted all of its resources to producing

sugar cane instead, it would be producing a much larger amount than the U.S., at point B.

The slope of the PPF gives the opportunity cost of producing an additional unit of wheat. While the slope is not

constant throughout the PPFs, it is quite apparent that the PPF in Brazil is much steeper than in the U.S., and

therefore the opportunity cost of wheat is generally higher in Brazil. In the chapter on International Trade you

will learn that countries’ differences in comparative advantage determine which goods they will choose to

produce and trade. When countries engage in trade, they specialize in the production of the goods in which

they have comparative advantage, and trade part of that production for goods in which they do not have

comparative advantage. With trade, manufacturers produce goods where the opportunity cost is lowest, so
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