3. General Equilibrium Picture Time: Use Figure 1 to answer (a) and (b), and use Figure 2 to answer (c). Person 2 Quantity of Y Y Iso Rev Y U Iso Rev Quantity of X Person 1 XA X2 Figure 1 Figure 2 Figure 1 illustrates a Production Possibilities Frontier for goods X and Y, 2 parallel Isorevenue Lines (the dashed lines) based on the initial prices Px and Py, and an indifference curve U representing consumer preferences for these goods. a. Why is point A not a sustainable equilibrium combination of goods X and Y at this price ratio? Why is point B not a sustainable equilibrium combination at this price ratio?(8) illustrated b. In general equilibrium, will the price ratio (Px / Py) be a larger or smaller ratio than by the dashed lines in Figure 1? Explain. (8) Figure 2 is an Edgeworth Box diagram, illustrating endowments and preferences for two people (Person 1 and Person 2) and two goods (X, moving horizontally, and Y, moving vertically). The initial endowment is at point A. Person 1's preferences are represented by the dashed indifference curve. Person 2's preferences are represented by the solid indifference curve. c. Are there mutually-agreeable trades that person 1 and Person 2 could make that would leave both individuals better off than they are at point A? How do you know? What would these trades involve - which person would likely give up X, and which would give up Y? (9)