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The following graph provides Production Possibility Frontiers for the New England colonies and England. Ships 30 PPF A 20 PPF B Manufactured Goods 10

 

The following graph provides Production Possibility Frontiers for the New England colonies and England. Ships 30 PPF A 20 PPF B Manufactured Goods 10 60 Which of these two PPFS, A or B, corresponds to the New England colonies and which corresponds to England? Why? a. b. Suppose that both the New England colonies and England currently produce at the midpoint of their respective PPFS. How many manufactured goods and ships will the New England colonies produce and how many manufactured goods and ships will England produce? Suppose next that the New England colonies and England produce only the good in which they have a comparative advantage. How many manufactured goods and ships will now be produced and who produces which good? c. Suppose that once each region specializes in the production of the good in which they have a comparative advantage. If the two regions agree to trade at the relative price of one unit of ships per unit of manufactured goods, will this make both regions better off? Briefly explain. d.

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