How do bananas illustrate the effects of international trade in microeconomics?

• A. Bananas are a luxury good and are only traded between wealthy nations, showing that trade is limited to high-income countries.
• B. Bananas are produced in every country, so international trade has little impact on their availability or price.
• C. Bananas are often grown in tropical countries and exported to regions where they cannot be produced efficiently, demonstrating how trade allows countries to specialize according to comparative advantage.
• D. Bananas are never subject to tariffs or trade restrictions, so their market is unaffected by international trade policies.

Answer: (C)

Verified step by step guidance

1. Understand the concept of comparative advantage, which means that countries specialize in producing goods they can make more efficiently relative to other goods.
2. Recognize that bananas are typically grown in tropical countries where the climate and conditions are ideal, giving these countries a comparative advantage in banana production.
3. Identify that countries without suitable climates for banana cultivation import bananas from tropical countries, allowing them to obtain bananas without producing them inefficiently.
4. See how international trade enables countries to specialize in goods where they have a comparative advantage and trade for other goods, increasing overall efficiency and availability of products like bananas.
5. Conclude that bananas illustrate international trade effects by showing how specialization and trade based on comparative advantage improve market outcomes and consumer access globally.