Principles of Economics

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NAME:_________________________

1. How many aspects of your life can you enumerate which involve some form of marginal analysis?

2. Law implies universal applicability and immutability. Can you think of goods for which there is not diminishing marginal utility?

3. Do you allocate your study time on the basis of how much an extra hour of study will raise the grade in a particular course? If not, why not? What does this behavior suggest about the P = MU rule?

4. Is it possible for a demand curve to slope upward? Can you construct an example, i.e., think of a good for which this happens?

5. The market demand curve is an aggregation of individual demand curves. Should product definition and geographic considerations enter into this aggregation?

6. What elasticities, other than own price, would be useful for a corporate economist? In what situations would you use elasticities?

7. In the textbook discussion of elasticities it is assumed that all movements are along the demand curve. When we actually compute elasticities for the real world, are the movements along the demand curve or between demand curves? Does this matter?

8. When we collect data on price and quantity, how do we know we have identified a supply curve or a demand curve?