Figure 4.1 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. I1 and I2 are the pre-trade and post-trade social indifference curves for both Canada and the Rest of the World respectively. Cotton (bales) Wheat (bushels) Canada 0 11 6 3 12 16 20 I1 I2 P2 P1 Cotton (bales) Wheat (bushels) P2 P3 I2 I1 S0 S1 C1 C2 S2 S3 4 8 12 8 10 16 Rest of the World 0 A B C D

Figure 4.1 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. I1 and I2 are the pre-trade and post-trade social indifference curves for both Canada and the Rest of the World respectively. Cotton (bales) Wheat (bushels) Canada 0 11 6 3 12 16 20 I1 I2 P2 P1 Cotton (bales) Wheat (bushels) P2 P3 I2 I1 S0 S1 C1 C2 S2 S3 4 8 12 8 10 16 Rest of the World 0 A B C D

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