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 OJB : (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 7m(cl) + (1 7r)u(C2) with u'(-) > 0, and u\"(-)

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