2 Edgeworth Economy (10 points) Rob has 10 coconuts and 5 bananas, whereas Wilson has 5 coconuts but 25 bananas. Rob's utility is UR = CB and Wilson's utility is Uw = CB1/2. (a) What are their initial indifference curves? What are their slopes? Is there potential for trade? (2) (b) Rob offers Wilson 1 coconut for 5 bananas (small units). What is the change in utility (in small units) for each if they go ahead with this trade? (2) (c) Wilson is contemplating a more favorable counter-offer. What is the bargaining range, i.e. the range of the price of bananas in terms of coconuts for which both sides would agree to a trade (in terms of small units)? (2) (d) What condition has to be true so that no more beneficial trades can take place? (1) (e) Now Friday sets up a shop and offers to exchange pp coconuts against one banana. With competitive exchange, what is pp? Remember that people can also consume fractions of a fruit. The demands are DS PR = IR/2, DR = IR/(2pB), DW = (21w)/3, and Du = Iw/(3ps). Hint:The exchange rate should be a fraction of 23.] (3)