Microeconomics 1 - Part 2 Problem Set 5 B. Salani November 2, 2022 due November 9 Exercise 1 and only Consider the following production economy. There are three goods: sugar 3, candy 0, and leisure L. The n consumers i = l, .. .,n have utility func- tions d. Edge Chi-1i): 83:03; Elli" Lilia where di is a positive number and 0 g L; g T. Two rms A and B produce candy from sugar and labor. Firm A must use F > 0 hours of labor just to get production going. Then if it uses (NA F) additional hours of labor and SA lumps of sugar it will produce CA = ((NA F)S_4)a pieces of candy. Firm B faces no xed cost; if it uses NB hours of labor and SB lumps of sugar it will produce 03 = (NBS-'3)\" pieces of candy. Initially the economy only has mg lumps of sugar, and the MN = nil" hours of time the consumers could provide. All candy consumed must be produced. 1. Interpret the parameters di and (J5 (and why do we impose 0: