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

question 33

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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. I1 and I2 are the pre-trade and the post trade community indifference curves of Canada respectively. After Canada engages in free trade, it will: 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<sub>1 </sub>and I<sub>2</sub> 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 S<sub>1</sub> and consume at point C<sub>1</sub>. B) produce and consume at point C<sub>0.</sub> C) produce at point S<sub>1</sub> and consume at point C<sub>0.</sub> D) produce and consume at point C1.


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