Consider the following one-commodity Samuelson model.
e = (1, 1), u(x0 , x1) = min(3x0 + x1, 2x0 + 5x1).
(a) Show the set of feasible stationary allocations in a diagram. Show indifference curves in the diagram.
(b) Show in a separate copy of the same diagram which of the feasible stationary allocations is Pareto optimal.
(c) Find a stationary spot price equilibrium, (x0 , x1, P , r , G, T), in which P = 1, where the endowment is the equilibrium allocation.
(d) Find a stationary spot price equilibrium, (x0 , x1, P , r , G, T), such that P = 1 and the stationary allocation(x0 , x1) = (0, 2) is the equilibrium allocation.
(e) What social welfare function is maximized by the endowment allocation?