The Figure Given Below Shows the Production-Possibility Curves of Canada

question 21

Multiple Choice

The figure given below shows the production-possibility curves of Canada (AB) and the Rest of the World (CD) . The pre-trade price ratio in Canada and the Rest of the World are given by the lines P₁ and P₃ respectively. The international price ratio faced by the countries is represented by the line P₂. I?₁ and I₂ are the pre-trade and post-trade social indifference curves for both Canada and the Rest of the World respectively. In the absence of trade, Canada consumes _____ bales of cotton and _____ bushels of wheat.

• A)20; 3
• B)16; 6
• C)20; 6
• D)12; 11

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Definitions:

Probability Distribution

A mathematical description of the likelihood of occurrence of different possible outcomes in an experiment.

Random Variable

A variable whose outcomes are determined by a random phenomenon or process.

Probability Distribution

A mathematical function that provides the probabilities of occurrence of different possible outcomes for an event.

E(XY)

The expected value of the product of two random variables, X and Y, representing a measure of their joint variability.