Short Answer Questions:

1. We showed in class that when the initial endowment is an interior point within the Edgeworth box, each consumer's offer curve passes through that endowment point. Does this mean that the initial endowment is part of a Walrasian equilibrium? Explain why or why not.

2. State the Folk Theorem.

3. True or False (and, most importantly, explain your answer): a monopolist engaged in second-degree price discrimination (where consumers can be of one of two possible types, high value or low value) will choose a menu of quantity-payment combinations that eliminate deadweight loss in the market.

4. State Walras' Law.