Question 1

In the early 1970s, the handheld calculator came out on the market.Before that time, the desktop calculator was an important item for those who had to make calculations.Use the theory of consumer maximizing behavior to explain what happened in the desktop calculator market and the handheld calculator market since then.

Accepted Answer

The answer of In the early 1970s, the handheld calculator...

Question 2

In his book, The Wealth of Nations, Adam Smith discussed the "paradox" of value.He pointed out that nothing is more useful than water, but it is sold for a low price.Diamonds, on the other hand, have very little useful value but command a high price.Use the concepts of total and marginal utility to explain this paradox of value.

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The answer of In his book, The Wealth of Nations,...

Question 3

Using the income and substitution effects, discuss and explain why consumers buy more at lower prices and why they buy less at higher prices.Do this for normal and inferior goods (be sure to define normal and inferior goods).

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The answer of Using the income and substitution effects, discuss...

Question 4

Explain in some detail how the theory of utility maximization is used to derive demand curves.Be sure to explain in your answer how the law of diminishing marginal utility is used in relation to the utility-maximizing condition.

Accepted Answer

The answer of Explain in some detail how the theory...

Quiz 7: The Analysis of Consumer Choice

Using the income and substitution effects, discuss and explain why consumers buy more at lower prices and why they buy less at higher prices.Do this for normal and inferior goods (be sure to define normal and inferior goods).

Explain in some detail how the theory of utility maximization is used to derive demand curves.Be sure to explain in your answer how the law of diminishing marginal utility is used in relation to the utility-maximizing condition.