The correct answer is - large coastal cities.
The favelas are essentially slums. They can be found in all of the big cities in Brazil. Basically, a favela is a place of the city that is inhabited by very low income families, the population density is enormous, and the living conditions are pretty bad.
The first official favela has been built in Rio de Jenairo in the 19th century. It was built and inhabited by soldiers who had nowhere to go after the war. This favela, nowadays known as Providencia, is located in the central part of Rio de Janeiro.