Question

Although there are a number of alternative treatments available across the globe, herbal products produced in Brazil are sold at a premium. The ancient Brazilian recipes for wellness are considered the main reason for the premium price. This is an example of ___ arbitrage.

a. economic
b. capital
c. cultural
d. administrative

Answer 1

Brazilian herbal products are priced at a premium because of their traditional recipes, which is an example of cultural arbitrage. This form of arbitrage highlights how cultural heritage can influence the perceived value and cost of a product in the international market.

Step-by-step explanation:

The premium pricing of Brazilian herbal products due to their ancient wellness recipes is an example of cultural arbitrage. Cultural arbitrage occurs when a product's value is influenced by cultural heritage and the uniqueness associated with it. Just as Japan may struggle to import Vietnamese rice despite the latter's comparative advantage in its production due to the cultural significance of rice production in Japan,

Brazilian herbal remedies command higher prices internationally because of the traditional and cultural value attributed to them.