1. Harvey consumes goods 1 and 2. His endowments of goods 1 and 2 are (6, 5) and his net demands for goods 1 and 2 are (2, -3). a. (2pts) What are his gross demands? b. (2pts) Draw a diagram illustrating his budget line, his endowment, and his consumption. Put good 1 on the horizontal axis. c. (2pts) Draw a dotted line to illustrate what his new budget line would look like if the price of good 1 doubles and the price of good 2 stays the same. Peter has an endowment of3 units of good x and 5 units of goody. He can buy and sell x at a price of$100 and y at a price of $200. He receives an income of$700 as alimony from a former spouse. Note that Peter has both endowments of the goods and money. a. (2pts) Calculate the amount ofx that he could afford if he bought only x and the amount of y he could afford if he bought only y. b. (2pts) Write an equation for Peter's budget. c. (2pts) Draw Peter's budget line for x and y. Show his initial endowment ofx andy on your diagram. Samantha Smoothie's utility function is u(c1, c2) = (162, where CI is her consumption in period I and c2 is her consumption in period 2. She earns $200 in period I and $220 in period 2. Samantha can borrow and lend at an interest rate of 10% and there is no inflation. (Zpts) Write down an intertemporal budget equation for Samantha. b. (Zpts) Draw the graph ofthe budget constraint. Label the magnitudes of vertical and horizontal intercepts and the slope ofthe budget line. c. (4pts) Use the utility function and budget equation to solve for her optimal choice of (cl, C2). Is she a saver or a borrower in period 1? 9' (Bonus points) Sally Kink is an expected utility maximizer with expected utility function pu(e|) + (l - p)u(cz), where utility function u(x) = 2x, for x