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In the figure below, AB is the production-possibility curve of Canada. I 1 and I 2 are two of the community indifference curves of Canada.

In the figure below, AB is the production-possibility curve of Canada. I1and I2are two of the community indifference curves of Canada. With free trade, the international price ratio is 0.25 bushel of wheat/bale of cotton, and Canada will import:

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Wheat (bushels) P I2 R I1 80 A- S1i C1 60 50 Co S Q B 25 65 85 Cotton (bales) Canada

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