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\fConsider an exchange economyr with 2 consumers [A and B} and 2 goods [x1 and :2}. Consumer A has 3 units of 1:1 and 5 units of 112, while Consumer B has 4 units of :01 and 10 units of 3:2. Consumer A's utility function is A_ A A u a:132, and Consumer B's utilityr function is B_ B B \"H $1$2. Consider a competitive equilibrium allocation. Find the equilibrium price {Ming}. {Answer iust the number up to 2 decimal places.) Question :1 Consider a nite distributed lag [FDL] model of the form: 1': = l31o + 503: + 513t1 + gazea. + \"it [i] How would you interpret the regression parameters Eff.)- = 0,1,2? [ii] Given typical b'me series data why might you expect problems in estimating thate Ej- parameters? {iii} How do these :5} parameters relate to the longmo propensity [LRPL i.e. the change in the equilibrium value of y in response to a permanent change in 3? [iv] How would you rewrite the original model in order to direcy esb'mate the LRP and ii: standard error? [y] Would you necessarily expect the problems you noted in [ii] 1would recur in the reparameterized model in [iv]? [vi] Suppose yr represents new housing starts and 1rr interest rates. If you had quartedy data on these variables, specify a variant of the FDL model that amounts for possible trends and seasonality. Jusb'ly your choice of model. \f2. In the simulation exercise we will compare the relative performance of the two Wald statis- tics. Consider the following DGPs in Ho with X, and X2 obtained using Xli 0.6 0.3 X1i-1 Eli + (61i, (2i, U.) IID ~ MVN (0, Is) (3) X 2i 0.3 0.6 X2i-1 X 10 and ~ MVN (0, 12) ; (4) X 20 Furthermore, consider the following sample sizes n = 20, 30, 50, 100, 500 and the values of regression parameters (Bo, B1, B2) : (1,10,0.1),(1,5,0.2). Report the empirical rejection