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This question applies to parts 1-10. It contains drop-down multiple choice and numerical questions. Consider a world in which there are only two dates: 0

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This question applies to parts 1-10. It contains drop-down multiple choice and numerical questions. Consider a world in which there are only two dates: 0 and 1. At date1 there are two possible states of nature: A and B. The state at date zero is known. There is one non-storable consumption good, apples. There are two consumers in the economy. The endowment of apples at time 0 is equal to 2 for each consumer. At time1 the endowment of apples is statedependent. State physical probabilities, 11, and statedependent endowments, e, for each consumer at time 1 are given in the table: State Probability Agent 1 endowment Agent 2 endowment A 0.4 2 2 B 0.6 2 4 The expected utility is the same for both consumers and is given by so + ,6[7rA - u(cA) + \"B - u(cB)], where the instantaneous utility at time 0 is linear and is just equal to consumption; the instantaneous utility at time 1 is given by u (c) = 1n(c) (natural logarithm). The consumer's time discount factor, B, is 0.90 for both consumers. In this economy, only atomic (Arrow-Debreu) securities can be traded. Note: round your answers to 3 decimal places if necessary. 1) Compute the equilibrium consumption of consumer 2 in state B: BX 2) Compute the equilibrium state A forward atomic price: C]

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