Problem 4 - Equilibrium Calculate the equilibrium relative prices in an economy composed of two individuals, Whitney (W) and Zack (Z), which have the following preferences and W W u (x,x) = log(x) + x u(x,x) = log(x)+7x They each have endowments (w, w) and (w7, w2) respectively. a) Calculate the equilibrium price of good 1 relative to good 2. b) Draw the Edgeworth box associated with this problem for a y of your choice. c) Verify that, at the equilibrium prices, the market for both good 1 and good 2 clear. d) Discuss how the equilibrium price changes when y changes. e) Suppose that both Whitney's and Zack's endowments of good 1 double. What happens to the equilibrium price of good 1?