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Consumer choice boils down to what three things?
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What is the difference between a cardinal and ordinal measure of utility?
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What is the difference between total versus marginal utility?
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Explain the law of diminishing marginal utility.
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State the utility-maximizing rule or the equimarginal principle.
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When is utility maximized?
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What is the difference between real and nominal income?
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What does the price elasticity of demand measure? Write out the formula.
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Why do we use percentages rather than absolute amounts in measuring consumer responsiveness?
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Define and illustrate elastic and inelastic demand.
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What are the four major determinants of price elasticity of demand? Explain how each affects demand elasticity.
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Suppose your business sells widgets and demand for your product is relatively price elastic. What would you do to raise your total revenues?
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Why do many airlines offer fare discounts to people who stay over on a Saturday night?
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Why don’t most new cars sell at their sticker price?
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Why do many farmers go bankrupt when crops are plentiful?
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If the government imposes a sales tax on a product that is highly elastic, what will happen to total tax revenues?
