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Consider a general equilibrium endowment economy with two agents, Adam (A) and Bob (B). The endowment is: ( W1 , W 2 ) , (

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Consider a general equilibrium endowment economy with two agents, Adam (A) and Bob (B). The endowment is: ( W1 , W 2 ) , ( w , w 2 ) - 1 ( 2, 2 ) , (5, 5 ) } Both agents are having quasi-linear preferences, such that UA(ZA, IA) - 2 24+2% UB(IP, xB) = 2 1P +23 ** Part a (10 marks) What are the vertices of the Edgeworth Box? * Part b (10 marks) Find the contract curve. Hint: The MRSs of the two ageents are: IMRSA = (ZA)-1/2 IMRSBI = (xB)-1/2 and along the contract curve, the two MRSs are equal and that the market clearing conditions must be satisfied. ** Part c (20 marks) Find the competitive equilibrium price ratio p

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