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Q. Describe Classical Economics?
Classical Economics:Tradition of economics which began with Adam Smith and continued with other theorists including Thomas Malthus, David Ricardo, Jean-Baptiste Say and others. Classical economists wrote in the early years of capitalism and they uniformly celebrated productive, innovative actions of new class of industrial capitalists. They focused on political development and dynamic economic of capitalism, analysed economics in class terms and advocated the labour theory of value.
Let Consider the following insurance market. There are two states of the world, B and G , and two types of consumers, H and L, who have probabilities p H =0.5 and p L
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