Look at the attached problem.

Consider an auction with three items {(1, b, c} and three bidders. Suppose that it is possible to allocate more than one item to one bidder, and that each bidder's valuation is as follows: For example, for bidder 1, item a is worth $1 and item b is worth $2, while having both a and b is worth $6. That is, a. and b are complements for bidder 1 since their value together is more than the sum of the value of owning each on its own. On the other hand, a. and b are substitutes for bidder 2 since their value together is worth less than the sum of the value of owning each on its own. (a) What is the efcient allocation of the items a, b, and c? That is, what is the allocation that maximizes social welfare? (b) Suppose that the VCG mechanism is used to allocate these items. Compute the transfer payments for each bidder