DSE 2016 doubt

[Halflife]

CONTENTS DELETED

The author has deleted this message.

[Abhitesh]

Answer seems to be B.
First find the set of pareto-optimal(PO) allocations.
Then take any value of px with py=1 and solve optimization prob. for both agents.
Check if your optimal soln. clears market. If yes then prices are competitive.

[Halflife]

CONTENTS DELETED

The author has deleted this message.

[Abhitesh]

Take it M1 and M2. If p<1 then (x2=6 and y2=0) and (x1 = M1/p+1 =y1) will be optimal which doesn't clears market.

[Rajesh]

According to this logic, then if, say M2= Rs. 10,then:

If p<1, x2=5 (we can't assume his income to be sufficient to buy 6 units wholly)
and so (x1,y1)= (1,1)(still again depend on income of M1)

so, shouln't it be option d in that case?