Consider a pure exchange economy without free disposal (i.e. agents cannot get rid of their goods) and with two commodities, j = 1, 2; and two traders i = I, II. Each trader i has the consumption set R 2 + and the endowments are given by e = (eI , eII ) = ((0, 8),(10, 0)). The preference relations of traders are given by the following utility functions uI (xI,1, xI,2) = min{2xI,1 + xI,2, 3xI,2}; uII (xII,1, xII,2) = min{3xII,1 + xII,2, xII,1 + 3xII,2}. A)Characterize the set of Weakly Pareto optimal allocations and Pareto optimal allocations and core allocations. B. Characterize the demand correspondences of these traders and identify the competitive equilibrium prices and allocations. If there is none, show why. C. Determine whether or not the conclusion of the first fundamental theorem of welfare economics holds. I.e. is every competitive equilibrium allocation Pareto optimal? How about the core? Is every competitive equilibrium allocation in the core? D. Determine whether or not the conclusion of the second fundamental theorem of welfare economics holds. I.e. can we support every Pareto optimal allocation as a competitive equilibrium allocation of an economy obtained via a feasible redistribution of the initial endowments?

Question 5 Economists face an obstacle that many other scientists do not face. What is that obstacle? @ It is often difficult to formulate theories in economics, It is often impractical to perform experiments in economics, The scientific method cannot be applied to the study of economics. Economics cannot be addressed objectively; it must be addressed subjectively.Three economic questions must be determined in all societies. What are they? ()a) What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced? O b) What goods will be produced? How will goods be produced? For whom will goods be produced? ( c) What will the price of each good be? Who will produce each good? Who will consume each good? d) How much will be produced? When will it be produced? How much will it cost? How do microeconomics and macroeconomics differ? ()a) Microeconomics studies aggregate decision making, while macroeconomics examines individual decision making- (b) Microeconomics utilizes positive economic analysis, while macroeconomics utilizes normative economic analysis. c) Microeconomics is concerned with consumer behaviour, while macroeconomics is concerned with firm behaviour. ()d) Microeconomics studies individual decision making, while macroeconomics examines aggregate decision making.Question 9: Jimmy is pursuing his degree in a private institution. When he was in his third trimester, the school announced that it will be implementing a new regulation in that all students must wear a uniform that the school will be introducing. Jimmy does not think that this is correct, given that his contract with the school makes no mention of uniforms. Which of the following rules suggests that once a contract has been reduced in writing, one party cannot unilaterally change it terms? (2 marks) A. The Parol Evidence Rule. B. The Rule in Pinnel's Case. C. The Golden Rule. D. The Vitiating Factor Rule