1. Consider a two-consumer two-good exchange economy. Let the two consumers be labelled A and B and for the goods to be good 1 and 2. Assume both consumers have well-behaved (strictly convex, etc) preferences. There is an initial endowment for each consumer - A has (WA], WA?) and B has an initial endowment of ( W B ) , W B 2 ) . Using the assistance of an Edgeworth Box, outline the initial allocation, the contract curve and the core. With the assistance of your Edgeworth Box, explain the process of a competitive market reaching equilibrium if initial price ratio is such that the market is not in equilibrium. What are the characteristics of the competitive market equilibrium you have found? (10 marks)