Figure 2.2. Canadian Trade Possibilities

-Consider Figure 2.2.With trade, Canada consumes
A) 12 televisions and 8 refrigerators.
B) 12 televisions and 16 refrigerators.
C) 8 televisions and 16 refrigerators.
D) 24 refrigerators.

Question

Figure 2.2. Canadian Trade Possibilities
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-Consider Figure 2.2.With trade, Canada consumes
A) 12 televisions and 8 refrigerators. 
B) 12 televisions and 16 refrigerators. 
C) 8 televisions and 16 refrigerators. 
D) 24 refrigerators.

Quizplus · Accepted Answer

With trade, Canada can specialize in producing refrigerators, and trade them for televisions with the US. This allows Canada to consume more of both goods than it could produce on its own. The US can specialize in producing televisions and trade them for refrigerators with Canada. Therefore, Canada will produce and export 16 refrigerators to the US and import 12 televisions from the US. This results in Canada consuming 12 televisions and 16 refrigerators.