Suppose that James and Karen have 10 units of food and 6 units of

clothing between them. Suppose that initially James has 7 units of food and 1 unit of

clothing, and Karen 3 units of food and 5 units of clothing. Assume that James and

Karen have the following utility functions:

U_J(F, C)=F^{1/2} C^{1/2},

U_K(F, C)=F^{1/2} C^{1/2}. (Symbol "^" means "to the power".)

a. What are the equilibrium prices of F and C and the equilibrium allocation?

b. Draw an Edgeworth box diagram to show the equilibrium allocation is efficient.