2.(20 points) Suppose there are two consumers, A and B.

The utility functions of each consumer are given by:

U_A(X,Y) = X +Y

U_B(X,Y) = Min(X,Y)

The initial endowments are:

A: X = 1; Y = 1

B: X = 5; Y = 5

Illustrate the initial endowments in and Edgeworth Box.Be sure to label the Edgeworth Box carefully and accurately, and make sure the dimensions of the box are correct.Also, draw each consumer's indifference curve that runs through the initial endowments.Is this initial endowment Pareto Efficient?

3.(16 points) Foreach of the following production functions, determine whether it exhibits increasing, constant or decreasing returns to scale:

a) Q = K + L

b) Q = L + L/K

c) Q = Min(2K,2L)

d) Q = (L^.5)(K^.5)