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tehthe questio is here Consider the following exchange economy. There are two goods (X1, X2) and two consumers (A, B). Consumer A has the utility

tehthe questio is here

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Consider the following exchange economy. There are two goods (X1, X2) and two consumers (A, B). Consumer A has the utility function: UA = (XA) 0.5 x (X.A) 0.5 Consumer B has the utility function: UB = In(XP) + In(X5 ) Consumer A is endowed with 10 units of each good. Consumer B is endowed with 5 units of X1 and 10 units of X2. Part A [8 marks] Draw the Edgeworth box diagram and show the endowment point. Next, find the demand functions for each individual and determine a set of prices such that all markets clear. Given these prices, what are the Pareto Optimal allocations for each individual? Show these results on your Edgeworth Box diagram. Part B [2 marks] A social planner argues that society would be better off should more of good 1 be produced in lieu of good 2. Along with your Edgeworth Box diagram, illustrate this scenario in a new graph

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