1.Describe each of the four properties of indifference curves. 2. Explain what is meant by “asymmetr

1.Describe each of the four properties of
indifference curves.
2. Explain what
is meant by “asymmetric information.” Identify and explain the two
basic types of problems that arise when there is asymmetric information.
3. Much has been
made of the fact that people don’t consistently act with scientific
rationality. What is meant byrationality? Consider the three “systematic
mistakes” discussed in your text. What are the costs of making those
“systematic mistakes”? Is it possible to act
“irrationally,” or is rationality defined by the individual’s
approach to decision making?
4. Describe and
explain the budget constraint. How does a consumer maximize utility under a
given budget constraint? How do consumers know if they are not maximizing
utility?
5. Explain the
Condorcet Paradox, the failure of majority rule to produce transitive
preferences for society. Explain Arrow’s impossibility theorem. What does this
say about society’s choices?