Problem 1. General Equilibrium Consider the case of pure exchange with two consumers. Both consumers have CobbDouglas preferences, but with different parameters. Consumer A has utility function uxf', I?) = (:cf')"(x')1"'. Consumer B has utility function uB(ale, as?) = (5613)(:c)1'. The endowment of good 3' owned by consumer i is w} The price of good 1 is p1, While the price of good 2 is normalized to 1 Without loss of generality. 2. Again, assume wf = 12, wp = 20, wa = 20, w? = 12 with a = 1/2, B = 1/2. Consider the following allocations. Do they lie on the contract curve? If so, explain. If not, prove why it isn't. Hint: to prove Pareto efficiency, it suffices to show that the indifference curve for person A at this allocation has the same slope as the indifference curve for person B at this allocation]. (a) ((x4, x2), (xP, x2)) = ((12, 20), (20, 12)) (here, our allocation is just our endowment) (b) ((24, 24), (2P, a2)) = ((0, 0), (32, 32)) (c) ((24, 4), (xB, x2)) = ((16, 16), (16, 16) )