Use the article "The Meaning of Competition" by Friedrich A. Hayek to answer the following question.

1. Hayek maintains that "the theory of competitive equilibrium assumes to exist the situation which a true explanation ought to account for." What exactly does the theory overlook? Why is this an important deficiency?

Link to article: https://competitionandappropriation.econ.ucla.edu/wp-content/uploads/sites/95/2018/06/HayekMeaningOfCompetition.pdf

Use the article "Behavioral economics research and the foundations of economics" by Vernon L. Smith to answer the following question.

2. Does Smith (2005) ("Behavioral Economics Research and the Foundations of Economics") argue against or in favor of the following proposition: "To the extent that markets are rational as in controlled supply and demand experiments or irrational as in experimental asset bubble markets, this derives directly from the rationality or irrationality of agents." Explain Smith's argument.

Link to article: https://pdf.sciencedirectassets.com/272092/1-s2.0-S1053535704X0010X/1-s2.0-S1053535704000629/main.pdf?X-Amz-Security-Token=IQoJb3JpZ2luX2VjEOL%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCXVzLWVhc3QtMSJHMEUCIQDdVKPOtmYNGzoLldoEnJdn5AVaAxp%2FpjGkT9l5HX4bagIgQlGkgYO7X3XgQLXGPjNhMaLKzcIcc76ZmTXJXKGOs24qvAUI2%2F%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FARAFGgwwNTkwMDM1NDY4NjUiDHIk5Q7EJR6v4NoDriqQBa2gFOmBp3kyLgDj%2FGy578lMDn4byI9WXc8%2FHj6rtqmAdr5BNa9azRUbYQAhVisGE9TGbSUn%2BMBnOUoqBQ%2BRkKH%2FEPZrJ2t7KQZttNTxmBM091sP8lke2GCzGS4k1s3TaOrx%2Bzm6tRXWlKMqF%2F2g7vQdPirbkHSJTjNRX8ivMkJadIiBxGEZG6Xh1gD6uctg4m0BmlOsUHZDD8WHmbi9CCDDRNVvMeZ%2BcP19ResmQ2nAxr67uTL8yCeEOcsOfQpY5ulBno073FrKwzomPe6MPt%2FVfB9tWGWBOn4UlP%2BBlvDcnmQRVyYUNJEeZIAlxvrpsW9m7AIvzg9XQBJZl0a4qhp%2B%2F79y8yCwQxpJJrbdEj1%2FxVPGBW6d1R0MPo1LCQti3csjWWoqzx2IKTYWCgW3H368EanF4sBAw8vSq3hpYAYttqlAxqHdmKEv4VSUa33UyH6OgbWjPqyrFe2fR8kFg3iHBHfRoQtnGyGHfRO3PrcbiluCwbBNmSmA%2B1AnV3KWxwm1fyKg%2FXMA4mZexIzThBW0EO04WCKQ8xQNNt1Qkt7FQJUdI%2BhwFOUaOVzSbhy1drELBkGER9nXb2dqO1kIoFUSlTrPgojWWWKEysWwc5ibsDBhUM9Re%2B1%2Fc5fbQas8YP8MhDvlrazt%2FRIyhH5aiVcD%2FuuZCz5IlWHOIm6NgLog41M%2B5GqBU8G%2BTXIjd%2FZfiOt9L26mNP8gr9uNQAx70mz%2BzntinrBncZp8nFQ6hinZHiS97OnD21ZKrIAzfIA9dqdpLXt4m4sI7CCIDHLXE9D767VlqaLJz1MGENUuK9f5JRglj3tngoq2a7bqA6LdgR2e6FRi0H7iZyFy2gm%2BhT99kL70y%2BdH3vy%2BsxdaNbsDMIvflaIGOrEB1pXl6zByaAJ5XMz6zPlX6T22ngzWrxOCpRSSAle0vk5Dp0qIxif404UPQQMD1eQNfgQZrkybwWpugsTS49E1dJ0JXvi2F0GKYpzk96Wnej7uY0zkk%2FYr5niGUL9wNgFSH3txgx%2F98g9Am808VhQrnlAX6l%2FCxhny%2B6faap0uw6sZwHXWfZXS6NJ%2Bv%2F0%2BfBXNqpt082FNQaEIndT%2B6hqW87ICQgdbFMW2Tp4OLEanZJPg&X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Date=20230423T190737Z&X-Amz-SignedHeaders=host&X-Amz-Expires=299&X-Amz-Credential=ASIAQ3PHCVTY7XV3KYWY%2F20230423%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Signature=8199e011df92fe5bdc7d6b2676a361630f2444555b3921f5304d20c986560c87&hash=e1831be3bbc3cdba83cc857420de9bcca63443b146419e85bf4c3315a0daf26b&host=68042c943591013ac2b2430a89b270f6af2c76d8dfd086a07176afe7c76c2c61&pii=S1053535704000629&tid=spdf-50495fb8-495e-4394-b23b-56989a1e97c3&sid=357f9480904dd847500afd1-6d7cb6ca95b5gxrqa&type=client&tsoh=d3d3LXNjaWVuY2VkaXJlY3QtY29tLmV6cHJveHkudGNuai5lZHU%3D&ua=0f15520c055a5856085905&rr=7bc863f6e997c331&cc=us

Answer the following question without using any sources.

3. What is the inverse elasticity rule?

4. Describe the cost conditions under which price discrimination is most likely? Why is price discrimination likely under these conditions?