This is a very contextual example, because the reality is side by side comparisons between "a train line" and "a highway" barely, if ever exist. Not only does your example assume that transit and highways are competitive, but that they serve similar enough markets that people can choose one or the other. Very rarely is this actually the case, especially in Toronto/GTHA. In fact, many cities that often widen highways that people like to point to as examples of Induced Demand in action often show no such thing. A prime example of this is LA where the only public transit is an abysmally slow Light Rail system, and a commuter rail that at best runs every 2 hours, and doesn't even serve that many destinations. Induced Demand simply can't happen in the way you describe it because the people who are benefiting from a highway widening are unlikely to be previous transit riders.No.
Imagine a train line and highway running in parallel. Some people will always choose to use one or the other, but most people are swayed by a variety of factors, travel time, cost, etc.. Each mode has its benefits and drawbacks.
Now imagine a government widens the highway. Traffic levels are now lower on the highway. Some people who took transit will now see that using the highway is faster than it used to be and the scales are tipped in the direction of driving when previously they slightly preferred to take transit. They switch from using transit to driving and within a few years the capacity of the new lanes has been entirely consumed by new drivers.
At its absolute worst, induced demand looks like this: government improves highway, people switch from transit to driving, government sees traffic going up and transit use going down. Government spends more money building more highways, and cuts service on the train line. This makes driving better and transit worse, which causes even more people to make the switch, so government sees a demand for more lanes and fewer trains etc, etc, and suddenly you find yourself in a transit death spiral.
The same principle applies in Toronto. Sure we have a pretty good transit network especially with GO transit feeding the downtown core, but the reality is that A) GO is very radial, and whilst it's amazing heading into downtown Toronto, for most other trips it's pretty bad. 2) Most of our widening projects are on corridors that aren't really heading into downtown, and are instead more suburban sections of our highway network. The many widenings we do for the 401 mostly serve the transit starved Mississauga and North York, and the newly widened 400 and under construction 404 serve York Region. Those expanded highways aren't really competing for downtown bound traffic, and as such aren't pulling ridership from transit.
In short, your entire scenario is moot, and doesn't represent the actual impacts of how we widen our highways in any meaningful way.