Economics 201 B. T. AllenPRODUCTION POSSIBILITIES FOR MISSISSIPPI AND KANSASMISSISSIPPI Cotton 0 10 20 30Wheat 30 20 10 0KANSAS Cotton 0 10 20 30 40PRODUCTION POSSIBILITY CURVES FORAN EXAMPLE OF INTRA-NATIONAL TRADEor, Why the U. S. Constitution Forbids State Restrictions on Interstate CommerceEconomics 201 B. T. AllenPRODUCTION POSSIBILITIES FOR MISSISSIPPI AND KANSASMISSISSIPPI Cotton 0 10 20 30 Wheat 30 20 10 0Costs: 1 unit of Cotton costs 1 unit of Wheat1 unit of Wheat costs 1 unit of CottonKANSAS Cotton 0 10 20 30 40 Wheat 80 60 40 20 0Costs: 1 unit of Cotton costs 2 units of Wheat 1 unit of Wheat costs ½ unit of CottonPRODUCTION POSSIBILITY CURVES FOR MISSISSIPPI KANSASOK, that’s the setupNow suppose each state tries to be self-sufficient in both products.This could mean total production of MS KS TOTALCotton 10 20 30Wheat 20 40 60Now suppose that: 1. Mississippi citizens offer 10 cotton for 16 wheat, because wheat is cheaper that way (5/8 < 1), and they get more for their cotton (8/5>1).2. Jayhawk farmers accept 10 cotton for 16 wheat,because cotton is cheaper that way (8/5 < 2), and they get more for their wheat (5/8>1/2).And with trade and specialization, we now have production totals of MS KS TotalCotton 30 0 30Wheat 0 80 80Total output (and consumption) INCREASE!Specialization and trade did it
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