1. Consider a two person exchange economy over two periods, with the two goods. Preferences for person i={A,B} are U i(ci) and endowments being wi where ci = (ci 1;ci 2) and w1 = (10; 0) and w2 = (0; 10) Assume each person has utility U i(ci) = ui(c1) + ui(c2) where ui(ci) is strictly concave with Inada conditon in each good and both utilities continuously differentiable. a. Define the two period borrowing-lending Marshallian choice problem for the two agents of this economy. b. Is it possible in this economy that in competitive equilibrium for these preferences these two agents do not trade? Explain in detail. c. Depict a competitive equilibrium in this economy (i.e., draw it) if utility has is Cobb Douglas over both goods j = 1; 2 for both agents d. Show the to decentralize any pareto optimal allocation as a competitive equilibrium, you generally need transfers. e. For a fixed endowment, define the pareto improvement set mathematically (do not just draw it. Define precisely). f. Explain why opening markets and allowing trade can never hurt the agents in this economy (and actually must make each of them strictly better off in terms of welfare.) .