Consider an exchange economy with 2 consumers, A and B, and 2 commodities, x and y. Each consumer is initially endowed with one unit of x and one unit of y...

Consider an exchange economy with 2 consumers, A and B, and 2 commodities, x and y. Each consumer is initially endowed with one unit of x and one unit of y. (Hence, at prices pr and py their wealth/income is (p, + p) .) Their preferences are as in question 1, above. a. Write the expression for each person's budget constraint. b. Determine their demand functions, i.e., solve their respective utility maximization problems for x and y as functions of pr and py. c. Verify that Px = Py = are competitive equilibrium prices and determine the 2 equilibrium allocation. (Hint: what is the "supply" of x and y?) d. Verify that the competitive equilibrium allocation is Pareto efficient