Question 4 There are 200 identical consumers, each with preferences u(x, y) = x + 0In (y) where a denotes consumption of lentils and y denotes waffles. 100 consumers each owns 10 units of lentils and 100 consumers each own 20 units of waffles. Let the price of lentils be 1. In the following, focus on interior solutions. (a) Derive the demand function for waffles and find the general equilibrium price of waffles. [6 marks] (b) How do the price of waffles and the distribution of income depend on 0? [6 marks] (c) Is there a case for government intervention to make a transfer from owners of waffles to owners of lentils if 0 increases? Draw on the course reading in formulating your answer. [13 marks]