An economy has consumers Gigit (G) and Marsiano (M) with goods A and B.Gigit and Marsiano both have the same utility function from goods A and B with marginal utilities:

MUA= 2A^-0.7^B0.7and MUB= 2A^0.3B^-0.3

Prices are PA= $5 and PB= $1.Gigit has $150 income and Marsiano $600 income.The economy is at point on its Production Possibilities Frontier producing 75 units of A and 375 units of B

a. Show and explain why/how at the competitive equilibrium, resources are allocated efficiently in this economy (i.e., that the efficiency conditions are satisfied.)

b.Suppose the demand for good A increases. Explain how the market equilibrium situation above adjusts to the increase in demand.In your explanation, illustrate the movements along, or changes to, your graphs/illustration above. You do not need to calculate, just illustrate and explain the adjustment.