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Transcribed Image Text:In the figure below, AB is the production-possibility curve of Canada. The line PQ shows
the price ratio of one bushel of wheat/bale of cotton. The international price ratio is
0.25 bushels of wheat/bale of cotton as shown by the line RS. I, and I, are two of the
community indifference curves of Canada. After Canada engages in free trade, it will:
Wheat (bushels)
P.
80
60
50
Si
25
Canada
B
65 85
Q
Cotton (bales)
O produce and consume points not labeled in the graph.
produce at point S? and consume at point Co
produce and consume at point Co
produce at point S, and consume at point C?
1
the price ratio of one bushel of wheat/bale of cotton. The international price ratio is
0.25 bushels of wheat/bale of cotton as shown by the line RS. I, and I, are two of the
community indifference curves of Canada. After Canada engages in free trade, it will:
Wheat (bushels)
P.
80
60
50
Si
25
Canada
B
65 85
Q
Cotton (bales)
O produce and consume points not labeled in the graph.
produce at point S? and consume at point Co
produce and consume at point Co
produce at point S, and consume at point C?
1
