ANSWER 3, 4, 5. 1 AND 2 HAVE BEEN PROVIDED FOR AIDE

You will now solve a Ricardian model where I have made some small changes to the setup relative to what we did in lecture. This will not significantly change how you solve the model. The changes will be that the countries a) have different utility functions from each other, and b) while the utility functions are still Cobb Douglas, they will not have the .5 exponents on each good. In particular, the U.S. will have a slight preference for Steel and Canada will have a slight preference for Lumber. To be precise, here are the utility functions and marginal utilities: I.4 $. 6 U.S.: U(S,L)=S-L4. This makes MUS =.6 and MU, =.4 I.6 L.6 8. 4 Canada: U(S,L)=S.4L.. This makes MUS =.4 and MU, =.6 LA You'll find that there will be something a little strange about the free trade outcome. I won't spoil the surprise. (Aren't you excited? Silly me, of course you're excited.) Be prepared