Figure 2.2. Canadian Trade PossibilitiesTelevisions1612840Canada'sTransformationScheduleTelevisions812International Termsof TradeRefrigeratorsTelevisions and refrigeratorsNeither televisions nor refrigeratorsс1620B24Figure 2.2 shows a straight-line production possibilities curve with televisions on the vertical axis andrefrigerators on the horizontal axis for Canada. The intercept on the vertical axis equals 16 and on thehorizontal axis equals 24. Point A shows a point where an indifference curve is tangent to theproduction possibilities curve where televisions on the vertical axis equal 8 and refrigerators on thehorizontal axis equal 12. A downward sloping straight line representing the international terms oftrade starts at a point where refrigerators equal 24; an indifference curve is tangent to this line at apoint where televisions equal 12 and refrigerators equal 16.Referring to Figure 2.2, Canada has a comparative advantage in:Refrigerators

International cooperation is central to trade principles. Specialization is encouraged by the notion…

Answered: Figure 2.2. Canadian Trade…

Figure 2.2. Canadian Trade Possibilities Televisions 16 12 8 0 4 Canada's Transformation Schedule 8 12 International Terms of Trade с 16 20 B 24 Refrigerators

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Figure 2.2. Canadian Trade Possibilities
Televisions
16
12
8
4
0
Canada's
Transformation
Schedule
Televisions
8
12
International Terms
of Trade
Refrigerators
Televisions and refrigerators
Neither televisions nor refrigerators
с
16
20
B
24
Figure 2.2 shows a straight-line production possibilities curve with televisions on the vertical axis and
refrigerators on the horizontal axis for Canada. The intercept on the vertical axis equals 16 and on the
horizontal axis equals 24. Point A shows a point where an indifference curve is tangent to the
production possibilities curve where televisions on the vertical axis equal 8 and refrigerators on the
horizontal axis equal 12. A downward sloping straight line representing the international terms of
trade starts at a point where refrigerators equal 24; an indifference curve is tangent to this line at a
point where televisions equal 12 and refrigerators equal 16.
Referring to Figure 2.2, Canada has a comparative advantage in:
Refrigerators

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