1. Consider the utility function q1^aq2^B. Let prices be P1 and P2 and income be m.

Derive

the indirect utility function,

the expenditure function.

2. State the Arrow Impossibility Theorem. Sketch a proof.

3. Differentiate between a static game of complete information and a static game of incomplete information. Explain the basic equilibrium concepts relevant for these games.

4. Discuss the overlapping generations model.

5. What is a social welfare function Compare the Bergson social welfare function and the Arrow social welfare function.

6. Explain in what ways decision-making under uncertainty differs from that under certainty. How does the situation change, if decision makers can insure against uncertainty?

7. What is a cooperative game Discuss the concepts of characteristic function and core.

8. Explain Walras' Law. Give a simple proof of the existence of general equilibrium under exchange.

9. Discuss Real Business Cycles. In what way can the Real Business Cycle Theory be considered an extension of the Classical Theory

10. Explain the following:

Shephard's Lemma

Profit Function

11. What is asymmetric information Explain how signalling occurs under a situation of asymmetric information.

12. What is a money demand function Explain the cash-in-advance model and differentiate it from money in the utility function model.