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Exercise 6. Assume U(c1,eg) = u{c1) + 13a (sq), where .6 E [I], 1]. Suppose that {(3,1)} is an Anew-Debreu competitive equilibrium, where (:5 (c)t.=1'2

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Exercise 6. Assume U(c1,eg) = u{c1) + 13a (sq), where .6 E [I], 1]. Suppose that {(3,1)} is an Anew-Debreu competitive equilibrium, where (:5 (c")t.=1'2 E Gang}, {cg}:=u) denotes the equilibrium allocation, and p E {Pill=o denotes the price system. I. Show that equilibrium prices are only determined up to a positive multiplicative constant, so we can always set 33; = 1 for one date t, and make the comumption good in that period the numemins or unit of account. Note: In this sense, the \"level\" of prices is indeterminate; only relative prices are deter- mined; there is no meaningful role for a unit of account in an Arrow-Debreu equilibrium. 2. Show that if u is striclty increasing, i.e., u' > I], then equilibrium prices, 1), are strictly positive

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