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2 The second welfare theorem Two agents meet to trade two goods. Agent 1 has utility function 1:11:31} = lust + In I; and endowment
2 The second welfare theorem Two agents meet to trade two goods. Agent 1 has utility function 1:11:31} = lust + In I; and endowment e1 = [3,4], while agent 2 has utilityr function 1.:2 [1:2] = 21:3? + or; and endowment c2 = [l], 3}. 1. Find a competitive equilibrium of this economy. 2. A social planner wishes to redistribute wealth so that both agents consume an equal amount of good 2. Find a competitive equilibrium with transfers which achieves this outcome. 3. Calculate a set of Pareto weights associated with each of the allocations you found in the previous two parts. with the normalization that each set of weights sums to 1
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