Problem 2 Consider a two-period finance economy, (UA, UB, wa, we, R), where there are two possible 1 0 states of the world, two individuals( A and B) and only one commodity. Let R = 0 1 be the asset structure and let U(x') = co+ ; Ina, + ; Inc2 (i = A, B) be the preferences. Suppose WA = (1, 4, 2) and we = (1,2,4). (a) Find the financial market equilibrium (both prices and allocations) for this economy. 2 1 1 (b) Now suppose that the asset structure is R = Find the financial market -2 1 equilibrium (both prices and allocations) for this economy