Question: Question [7]: [12 marks] Consider a a two state model. Suppose that there are two consumers, A and B; with endowments of wA = (6,4)

Question [7]: [12 marks] Consider a a two state model. Suppose that there are two consumers, A and B; with endowments of wA = (6,4) and 0.23 = (8, 6). Let the objective probability of state 1 occuring be 7r. Suppose that both consumers are expected utility maximizers and strictly risk averse and that they have identical preferences 7ru(cl) + (1 7r)u((32) with u'(-) > O, and u\"(-)

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