Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer the following:
(a) What is each country's cost ratio of producing plums and apples.
(b) Which nation should specialize in which product?
(c) Show the trading possibilities lines for each nation if the actual terms of trade are 1 plum for 2 apples.
(d) Suppose the optimum product mixes before specialization and trade were alternative B in New Zealand and S in Spain. What would begains from specialization and trade?