QUESTION 1 Alice (A) and Bob (B) have an endowment of goods 1 and 2, with Alice's endowment being (w4, ws) = (1, 2) and Bob's endowment equals (wł, w}) = (1,3). Alice's utility is given by u4 (xf, xf)...

Extracted text: QUESTION 1 Alice (A) and Bob (B) have an endowment of goods 1 and 2, with Alice's endowment being (w4, ws) = (1, 2) and Bob's endowment equals (wł, w}) = (1,3). Alice's utility is given by u4 (xf, xf) = 2 ln xf + In xf, while Bob's utility is uB(x}, x}) = ln xf +2 ln a. Suppose that the social planner considers it to be imperative that agent B consumes exactly one unit of good 1 and four units of good 2. Although the social planner can not force the individuals to a particular consumption, they can enforce transfers of good 1 between the consumers (transfers of good 2 are not enforceable by the social planner). What transfer of good 1 would guarantee that in the resulting competitive Walrasian equilibrium consumer B consumes one unit of good 1 and four units of good 2? Select one: O a. One half unit of good 1 has to be transferred from agent A to agent B. Ob. There is no endowment for which agent B would consume xf = 1 and x = 4 in the corresponding competitive equilibrium. Therefore, no such transfers exist. O C. One unit of good 1 has to be transferred from agent A to agent B. Od. Transferring good 1 is not sufficient. It is necessary to transfer one unit of good 2 from agent A to agent B.