1. a. In the absence of trade, Canada would produce and consume how many televisions and
refrigerators? Explain your reasoning. b. With specialization, how many televisions would
Canada produce? Explain your reasoning.
Solution
a. in the absence of trade, canada can produce and consume 12 units of refrigerators and 8 units
of televisions. based on the line transformation schedule, the point where A intersect, is the
determination point of televisions and refrigerators.
b. with specilization, canada can produce 12 units of televisions and 16 units of refrigerators. the
point C, which international terms of trade represents production of refrigerators and televisions
in Canada.