1. Midterm 2
Review

2. Midterm 2 (L9-L14) Applications of buying and selling Labor Supply
Intertemporal Choice
Uncertainty
Markets and Exchange
Pareto (In) efficiency
Competitive equilibrium
First Welfare Theorem

3. Applications

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

5. Risk Aversion (definition)
Expected value of lottery:
Examples
Risk aversion
better than

6. Risk Attitude

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

8. Uncertainty: Insurance
Choice:

9. (Not) Fair Insurance Premium

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

11. Edgeworth Box (and Efficiency)

12. Pareto Efficiency and Contract Curve

13. Competitive Equilibrium (Definition)

14. Competitive Equilibrium

15. Competitive Equilibrium (Geometry)

16. Competitive E and Pareto Efficiency