Question: Can someone please explain how to answer the question attached for case (a) only. Thank you! Problem 5.3 Consider a finance economy with two states

Can someone please explain how to answer the question attached for case (a) only. Thank you!

Can someone please explain how to answer the question attached for case

Problem 5.3 Consider a finance economy with two states with probabilities It and 1 -It, respectively, and utility function of income In(x). Current consumption does not enter agents' utilities; they are interested only in consumption tomorrow. Compute equilibrium prices, equilibrium allocations, and gains from trade (in terms of ex ante expected utility of the agents), assuming, in turn, that w (1) := 3 := with It = 1/2, (a) w(1 ) := 3 w ( 2) : = with It = 2/3, ( b) w (1) := Co w ( 2 ) : = 2 with It = 1/2. ( c) Case (a) is completely symmetric. There is scope for full mutual insurance. Does it happen

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