1. Short questions (10 points)
2. a. Describe the first and second Welfare Theorem (2 points).
3. b. Describe the difference between risk aversion, risk neutrality and risk prefering (2 points).
4. c. Describe and explain the non-satiation assumption (2 points).
5. d. Describe and explain the difference between adverse selection and moral hazard (2 points).
6. e. Describe and explain the difference between income effect and substitution effect (2 points).