1. Midterm 2
Review

2. Three parts (L9-L16) Applications of buying and selling
Intertemporal Choice
Uncertainty
Markets and Exchange
Pareto (In) efficiency
Competitive equilibrium
Producers
Production function
Profit Maximization
Labor markets
Cost Minimization (cost functions)

3. Uncertainty Two states, probabilities Bundle = lottery
Bernouli and Von Neumann-Morgenstern U.
Examples:

4. Risk Aversion Expected value of lottery: Examples Risk aversion
better than
Utility and risk aversion

5. Utility and Risk Aversion

6. Certainty Equivalent Certainty equivalent of lottery Example
Risk Aversion:

7. Uncertainty: Insurance
Possibility of Flood
Insurance contract
Budget set

8. Uncertainty: Insurance
Choice:

9. Markets and Exchange (key ideas)
Edgeworth Box (apple-orange, IC, U)
Pareto Efficiency
Competitive Equilibrium
Competitive Equilibrium Pareto efficient?
Application: apple-orange, IC, U

10. Edgeworth Box (and Efficiency)

11. Competitive Equilibrium (Definition)

12. Competitive Equilibrium

13. Competitive Equilibrium (Geometry)

14. Competitive E and Pareto Efficiency