In the figure given below AB is the production-possibility curve of Canada. In the absence of trade, the price ratio is 1 bushel of wheat/bale of cotton as shown by the line PQ. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I and l2 are the pre-trade and the post trade community indifference curves of Canada respectively (You can ignore these). In autarky, Canada consumes at C0 and consumes at C1 after specialization and trade. After Canada engages in free trade, it will import: Wheat (bushels) P. R. 80 S 60 50 Q 25 85 Cotton (bales) Canada O 60 bales of cotton. O 40 bales of cotton. O 30 bushels of wheat O 80 bushels of wheat.

In the figure given below AB is the production-possibility curve of Canada. In the absence of trade, the price ratio is 1 bushel of wheat/bale of cotton as shown by the line PQ. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I and l2 are the pre-trade and the post trade community indifference curves of Canada respectively (You can ignore these). In autarky, Canada consumes at C0 and consumes at C1 after specialization and trade. After Canada engages in free trade, it will import: Wheat (bushels) P. R. 80 S 60 50 Q 25 85 Cotton (bales) Canada O 60 bales of cotton. O 40 bales of cotton. O 30 bushels of wheat O 80 bushels of wheat.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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