2. Consider an economy with one good x and two agents i{1,2} with utility functions ui(xi)=ln(xi). There are two equally probable states, s{L,H}. There are also two firms: firm 1 produces 1 unit in both of the states, whereas firm 2 produces 0 units in state L and 2 units in state H. Agent 1 owns initially the whole firm 1, while agent 2 owns initially firm 2. However, the agents can trade the firm shares with each other before the state is realized. The agents have no other endowment. 1 (a) Compute the equilibrium shareholdings and the market values of the two firms (relative to each other). (b) Suppose there is also state 3 , in which firm 1 produces 2 units and firm 2 produces 3 units. Create a call option on one of the firm shares, and use the firm shares and the call option to create an asset portfolio that returns 1 unit in any of the three states