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3. Consider a pure exchange economy with 2 agents and two goods, i = a, b. Both agents have the same utility function, Uj(yja, yjb)

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3. Consider a pure exchange economy with 2 agents and two goods, i = a, b. Both agents have the same utility function, Uj(yja, yjb) = Vyjayjb. The first agent has initial endowment (0, 1) and the second agent has initial endowment (1, 0). (a) Set good a to be the numeraire good in the economy. (b) Find the Walrasian equilibrium prices and quantities for each agent. (c) Argue that the Walrasian equilbrium is Pareto optimal

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