1. Consider two investor types, A and B, and two states that are equally likely. Suppose that there are two assets in the economy, one AD security for each state. Today, the endowments are (w*(0),w\"(0)) = (4,4), and tomorrow the endowments are (w(1),w(2)* = (1,3) and (w(1),w(2))\" = (5,1). The two agents have the following preferences: 2 U' = (0) + Zp(k) In (k) k=1 where (k) is investor type i's state-contingent consumption in period one. (a) Find each individual's demand for the AD securities and the associated consump- tion vectors: (e(1),(2))" and (c(1), (2))". (b) What is are the equilibrium AD prices? What are the individuals' expected utility in equilibrium