Did mostly merchants settle in the northern colonies?

Answer 1

No. Most people in all the colonies were farmers. Farming was a lot less efficient before modern times. Farmers worked very hard but produced much less food than they do today. It took a lot more farmers to feed the people. As late as 1900 in the US one person out of three was a farmer. Another way of looking at it is that one farmer could only feed two other people in 1900, and by 1900 farming was more efficient than in colonial times. Today only one person in sixty is a farmer in the US.

There was no way to transport crops over long distances, except maybe between cities near the coast. But moving foodstuffs by ship is expensive. Everywhere people lived in the colonies, most of them were farmers, and their crops went to feed their neighbors and their own families.