State whether the following statements are true or false and explain your answer in each case in no more than 3 lines. (6 questions, 5 points each, 30 points total) 1) Bilal believes that there is a 5% chance that his house will get burgled in the coming year. If Bilal is risk averse, he will agree to buy a home insurance policy that charges a premium of 0.05 for every 1 of insurance cover. 2) According to Arrow's Impossibility Theorem we cannot use a welfare function to arrive at a social preference that is complete, reexive and transitive. 3) In a pure exchange economy with two people having identical preferences, there will never be any trade. 4) There are two agents A and B. Agent A engages in an activity that pollutes water. The efcient amount of water pollution is independent of the allocation of property rights i.e. whether A or B pay the cost of reducing pollution. 5) In a general equilibrium analysis, when individual demand functions are not continuous, an equilibrium in which aggregate demand equals aggregate supply does not exist. 6) A second-price sealed bid auction is in general worse for the seller than a first-price sealed bid format because in the former case her revenue equals only the second highest bid while in the latter case she gets the highest bid