1. Consider an exchange economy with two households (A and B) and a non-storable composite consumption good. Each agent lives for two periods (t = 0, 1) and there is no uncertainty about their endowment at time 1. Specifically, there are two possible states of of the world: state s, occurs with probability 7, and state $2 occurs with probability 1 - 7. The endowment structure is summarized in the following table. household time 0 time 1 A 0 B O 2>0 Both households maximize their utility from consumption, which is given by U(co, ci) = log co + Blog ci, where i E {A, B}, B = 1/(1+ p) is the discount factor satisfying 0