Question 4 Consider an exchange economy with two agents, Alexa and Bart, and two goods, milk and wine. Before trading, Alexa owns 10 litres of milk and no wine, while Bart owns 10 litres of wine and no milk. The agents' preferences are represented by the utility functions = (mA)1/2 + WA where mA denotes Alexa's consumption of milk, WA her consumption of wine, me is Bart's consumption of milk, and is his consumption of wine. a) Describe all the efficient (i.e., Pareto optimal) allocations of this exchange economy. Recall that not all agents need consume a strictly positive quantity of all goods. b) Compute the competitive equilibrium of this exchange economy. Without loss of generality, normalize the price of wine, PW, to be equal to 1, and denote the price of milk by pm. What is the equilibrium price of milk? What are the agents' equilibrium consumptions of milk and wine? [10+10 = 20 marks]