- Derive an algebraic expression for the intertemporal budget constraint using c1 and c2 as period 1 and 2 consumption levels, p1 and p2 as period 1 and 2 price levels, and ρ as the real interest rate
- Is it better to be a borrower or a lender when ρ falls? Use indifference curve analysis to explain your answer.
- Explain, with reference to second-degree price discrimination, how a firm can increase its profits by making its product less attractive.
- . Explain why the stability of collusion depends on the interest rate.
- Critically evaluate the claim that in a Bayesian Nash equilibrium it is the follower who leads.
- What type of adverse selection might occur in an insurance market?
- How might an insurance company avoid adverse selection?
