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Please solve, my main issue are the diagrams, thanks ! Suppose the exchange economy consists of two individuals, A and B. There are two possible

Please solve, my main issue are the diagrams, thanks !

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Suppose the exchange economy consists of two individuals, A and B. There are two possible state of the world in the future, 1 and 2, and state 1 occurs with probability %. A's endowment of income is e(A) = (3,6) and B's endowment of income is 32(5) = {9,5}. The individuals can trade claims on their endowment before the uncertainty is resolved and income in state 1 is traded at price 331 and income in state 2 at price 10:. The two individuals are expected utility maximizers who derive utility from nal allocation. Both have the same vNM utility function 11(3) = 3321\". (a) Derive the equilibrium for this exchange economy. You can nor- malize p; = 1. (b) Draw the Edgeworth box of this economy. Mark the initial en- dowment e and the equilibrium allocation (1*, draw the budget line given the equilibrium price vector, and for each individual, sketch the indifference curve through the initial endowment and the one through the equiiibrium allocation. Do not forget to label everything! (c) Each individual strictly prefers the equilibrium allocation over the initial endowment. How can we see this from the Edgeworth box? (d) There does not exist a feasible allocation 6 such that each indi- vidual i = A, B strictly prefers a(i) over (1*(1') {Where (1*(3') is the final allocation to 3' in equilibrium). How can we see this from the Edgeworth box

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