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. I₁and I₂ are the pre-trade and the post trade community indifference curves of Canada respectively. After Canada engages in free trade, it will: A)produce at point S₁ and consume at point C₁. B)produce and consume at point C_0. C)produce at point S₁ and consume at point C_0. D)produce and consume at point C1.

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The Answer of 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. I₁and I₂ are the pre-trade and the post trade community indifference curves of Canada respectively. After Canada engages in free trade, it will: A)produce at point S₁ and consume at point C₁. B)produce and consume at point C_0. C)produce at point S₁ and consume at point C_0. D)produce and consume at point C1.

In the Figure Given Below AB Is the Production-Possibility Curve