Two ships, stranded in the middle of the ocean for decades, have become proficient in fishing and distilling water. Because both products are essential, each ship must choose how to distribute their labor and other resources wisely. The PPC for the first ship, the Santa Maria, is shown below. Santa Maria's PPC Tangent Lines (for Gallons of water 50 40 30 20 10 5 10 SA So 52 15 20 Pounds of fish water 50 40 30 20 10 0.5W/F 1.0W/F 2.0W/F 5 10 15 20 a) The ship has decided to produce each good at the point So. Draw potential Community Indifference Curves that show why this is the case. Explain. b) What is the price of one unit of water at this level of production? Will the price of water increase or decrease if the ship decides to produce at s? Explain why geometrically (on the graph) and analytically (in terms of costs). c) Realizing they can be more efficient in production, the Santa Maria decides to open trade with the Mayflower. They move their production to S, and their terms of trade are 2. Use your indifference curves to show a potential new consumption point, c. Identify the trade triangle. d) Draw a graph that shows the supply and demand for fish on the Santa Maria, identifying the price and quantity of fish before and after trade opens. Do the same for water. Label the following: 1. Autarky Price and quantity, 2. Trade price and quantity, 3. Number of units exported (for the exportable good) 4. Number of units imported (for the importable good). fish