Name a place south of capital in Paraguay (7)
I believe the answer is:
appoint
'name' is the definition.
(I know that name can be written as appoint)
'a place south of capital in paraguay' is the wordplay.
'place' becomes 'point'.
'south of' says to put letters next to each other.
'capital in' suggests taking the first letters.
The first letter of 'paraguay' is 'p'.
'point' after 'p' is 'ppoint'.
'a'+'ppoint'='APPOINT'
(Other definitions for appoint that I've seen before include "Assign to a post" , "Officially assign" , "Assign position to" , "Determine (a time/place)" , "Set in place" .)