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!

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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