Need answer from part 3 to part 7 only

1. Consider versions of scenarios 1 and 2 from the slideshow presentation about media of exchange. Specifically, there are three people: Eric, Jack, and Ginger. Eric has tea, but really likes cola. Jack has cola but really likes whiskey, and Ginger has whiskey but really likes tea. There preferences are represented by the following utility functions, where c, w, and t are indicator variables representing the consumption of cola, whiskey and tea. For example, c=0, w=1 and t=0 denotes the consumption of whiskey but not cola or tea. UEric(c, w, t) = 5c+w+t U Jack (c, w, t) = c +5w +t UGinger (c, w, t) = c+w+ 5t (i) Calculate the utility levels of the three individuals if Eric, Jack, and Ginger all choose to consume the substance they already own. (ii) Calculate the utility levels of the three individuals if Ginger gives his whiskey to Jack, Jack gives his cola to Eric, and Eric gives his tea to Ginger. Suppose Jack is going to meet Eric in the morning. Jack anticipates the possibility of another meeting in the afternoon, this time with Ginger. More specifically, he expects to meet Ginger in the afternoon with probability a > 0. Otherwise, with probability 1-1 > 0, Jack doesn't expect to meet anyone in the afternoon. (iii) What allocation yields the highest utility levels for everyone if it turns out that Jack does in fact meet Ginger in the afternoon? Explain who consumes what, as well as when and from who they obtained it. Calculate the three utility levels. (iv) Explain briefly (i.e., in two or three sentences) whether commodity money is involved in your answer to part (iii). (v) Give two reasons why whiskey, or any other spirit distilled from malted grain, might be well-suited for the role of medium of exchange. (vi) What happens if Eric and Jack start to implement the regime from part (iii), but unfortunately the afternoon meeting between Jack and Ginger does not happen after all. Explain who consumes what, as well as when and from who they obtained it. Calculate the three utility levels. Does anyone achieve a lower utility level than in the autarkic regime from part (i)? Does anyone achieve a strictly higher utility level than in the autarkic regime from part (i)? Now suppose Eric is also endowed with an intrinsically useless token. And suppose that, in the morning meeting with Jack, Eric offers to purchase Jack's cola with the token. There is still the possibility of an afternoon meeting, as described above, but no more meetings occur thereafter. (vii) Would Jack accept the token as a medium of exchange? Briefly explain your answer (i.e., in two or three sentences)