Question: There are two consumers A and M and two commodities x and y. A's endowment of x is 3 and that of y is 2.

There are two consumers A and M and two commodities x and y. A's endowment of x is 3 and that of y is 2. M's endowment of x is 1 and that of y is 6. A's utility function is given by: U_A = x * y and the utility function of M is also given by U_M = x * y.

a. Find the equation of the contract curve.

b. Find the competitive equilibrium

c.Compare the utility levels of A at her initial endowment level and at the competitive equilibrium

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