Question: need step by step explanations thank you 1. Consider an exchange economy with two households (A and B) and a non-storable composite consumption good. Each

 need step by step explanations thank you 1. Consider an exchange

need step by step explanations thank you

economy with two households (A and B) and a non-storable composite consumptiongood. Each agent lives for two periods (t = 0, 1) and

1. Consider an exchange economy with two households (A and B) and a non-storable composite consumption good. Each agent lives for two periods (t = 0, 1) and there is no uncertainty about their endowment at time 1. The endowment structure is summarized in the following table. household time 0 time 1 A 0 B 2>0 Both households maximize their utility from consumption, which is given by U( ) = logo + Blogg, where i c {A, B}, # = 1/(1+ p) is the discount factor satisfying 0

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