Question: Q3. (5 marks)There are two goods and two individuals with preferences represented by utility functions uA(:L'A, yA) : LCAyA and uB(a:B, yB) : argyB. Individual

Q3. (5 marks)There are two goods and two individuals with preferences represented by utility functions uA(:L'A, yA) : LCAyA and uB(a:B, yB) : argyB. Individual A has 8 units of good a: and 2 units of good y; and individual B has 2 units of good a: and 8 units of good y. (3.1) (1 mark) Find all Pareto Efcient (PE) allocations and draw the contract curve in an Edgeworth box. (3.2) (2 marks) Identify the core. Compute the competitive equilibrium, including the price and equilibrium demand. (3.3) (2 marks) Suppose there is a third individual, 0, in the economy. Individual 0 has 5 units of good a: and 5 units of good y, and his utility function is 11,0(330, ya) = mayo. Compute the competitive equilibrium, including the price and equilibrium demand

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