Hindriks, J. and G. D. Myles (2006/2013), Intermediate Public Economics, MIT Press; (2) Atkinson, A. B. and J. E. Stiglitz (1980), Lectures on Public Economics, McGraw-Hill;

1. Consider a competitive exchange economy with two consumers and two goods. Suppose that consumer 2' has initial endowments of = (w'i, Lug), where w;- > 0, 2' = 1, 2 and j = 1, 2. His preferences are given by the following utility function: Ui = aln(a:"]) + (1 a) ln(:c), where 0