1)Answer:(C)transaction costs

Explanation:Private solutions are possible if transaction cost is zero or extremely low.But, in real life, transaction costs are rarely low.

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2)

If a country can produce a certain good or service more efficiently than its competitive country, than the former is said to have an absolute advantage over the later.

Say a country A, given its resources can produce more quantity of wheat per acre than country B can produce, then we can say country A is more efficient in wheat prodction than country B therefore Country A is said to have an absolute advantage over country B in wheat production.

3.1 Brazil has an absolute advantage in production of sugar cane over US.

US has an absolute advantage in production of wheat over Brazil.

3.2 Its given in the question that both PPF diagrams are symmetric in dimension. We can clearly see that per acre production of Sugar Cane in Brazil is more than per acre production of sugar cane in The US, therefore Brazil is more efficient in production of sugar cane than the US. Thus we can say that Brazil has an absolute advantage over US in sugar cane production.

Similarly, we can see that per acre production of wheat in the US is more than the per acre production of wheat in Brazil. Therefore US is more efficient in production of wheat than Brazil. Thus we can say US has an absolute advantage over Brazil in wheat production.