Question 3 Consider a production economy with two agents, Bunter and Quelch, and a factory. Each agent is endowed with one unit of labor, and the factory uses labor to produce Brawndo (good 1) and Soma (good 2) according to some production function. Both Bunter and Quelch only derive utility from the consumption of Brawndo and Soma, but not from labor, and each of them is entitled to half of the factory's profits. Denote by (21, X2) the bundle of Brawndo and Soma, respectively, consumed by Bunter. Similarly, denote by (y1, y2) the amount of Brawndo and Soma consumed by Quelch. Let Bunter's utility function be u(X1, 12) = -1 - 1, and let Quelch's utility function be u(y1, y2) = -1 - 1 y1 y2 1. Suppose the factory can produce Vai 3 units of good 1 when z1 units of labor are used as input, and 2vz2 units of good 2 when z2 units of labor are used as input. Compute the Walrasian equilibrium of this economy and the utility of Bunter and Quelch. 2. Suppose now that the factory has become more efficient and can produce z1 units of good 1 when z1 units of labor are used as input, and up to z2 units of good 2 when z2 units of labor are used as input. Bunter and Quelch are concerned that this will make them worse off as less labor is required to make a certain level of output than before. Compute the new Walrasian equilibrium of this economy and the utility of Bunter and Quelch, and compare it with the answer obtained from (a). What is the new profit of the factory, and how does it compare with (a)