1. Consider a pure exchange economy with two consumers. Consumer 1 is Cousin Aditya and consumer 2 is Cousin Eli. There are two goods (hardware 3: and software y). (The two cousins have amazing destructive abilities, so you can consider these goods to be measured in innitely divisible units.) Consumer 1 has as initial endowments 1 unit of good a: and 0 of good y. Consumer 2's initial endowments are 0 units of good a: and 1 unit of good y. Consumer i's utility function (for 1' = 1,2) is ill-(Iini) = my, where mi and yi represent nal consumption of goods 2: and y by consumer i. (a) Represent this economy (preferences and initial endowments) in the Edgeworth box. (b) Write down the equations that describe the Pareto efcient allocations. Identify them in the Edgeworth box. Is the initial endowments point Pareto efcient? Why? Why not? (c) Calculate the competitive equilibrium of this pure exchange economy. You should indicate nal consumption of each agent and the equilibrium prices (remember that you can normalize the price of one good to be 1, pg 2 1 for example)