Macroeconomics 9th Edition by David Colander

Exercise 22

Suppose there are two states that do not trade: Iowa and Nebraska.ach state produces the same two goods: corn and wheat.or Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn.or Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat.t present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushels of wheat.
a.Explain how, with trade, Nebraska can end up with 40 million bushels of wheat and 120 million bushels of corn while Iowa can end up with 40 million bushels of corn and 120 million bushels of wheat.
b.If the states ended up with the numbers given in a, how much would the trader get