Multiple Choice
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. Which of the following can be inferred from this figure? 
A) Canada has a comparative advantage in the production of wheat.
B) Canada has a comparative advantage in the production of cotton.
C) Canada has an absolute disadvantage in the production of both the goods.
D) Canada has absolute advantage in the production of both the goods.
Correct Answer:
Verified
Correct Answer:
Verified
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