Question: 2. (20 points) Suppose there are two consumers, A and B. The utility functions of each consumer are given by: U A (X,Y) = X

2. (20 points) Suppose there are two consumers, A and B.

The utility functions of each consumer are given by:

U_A(X,Y) = X +Y

U_B(X,Y) = Min(X,Y)

The initial endowments are:

A: X = 1; Y = 3

B: X = 5; Y = 3

Illustrate the initial endowments in and Edgeworth Box.Be sure to label the Edgeworth Box carefully and accurately, and make sure the dimensions of the box are correct.Also, draw each consumer's indifference curve that runs through the initial endowments. Is this initial endowment Pareto Efficient?

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2. Find out if there are other reference points that can be used as reasonable alternatives.

1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.