👑Microeconomics and Consumer Behavior  Essays

Assess how the idea of rationality is used in the indifference curve
theory of consumer behaviour.

Explain what is meant by cost benefit analysis and consider how it might be used by a government to decide whether a new hospital should be built.

Discuss whether or not a teacher would benefit from specialisation.

‘Both the take-up rate and number of journeys per bus pass have been falling in recent years.’

Explain two factors which could lead to an increase in the demand for bus travel in the future.

(10 marks)

Explain what is meant by a normal good and comment on the link between total utility, marginal utility and a consumer’s demand curve for that good.

Explain how economists use the concept of elasticity to distinguish between inferior goods and necessary goods when consumer incomes change.

Explain why indifference curves are usually drawn convex to the origin, are downward sloping and do not cross each other. [12]

Consider, for an inferior good, the relationship between indifference curves, budget lines, price changes and demand curves. [13]

Explain the significance of cross elasticity of demand values that are negative, positive and zero.

Explain how economists use the concept of income elasticity of demand to distinguish between different types of goods.

Explain how economists use the concept of elasticity to distinguish between substitute goods and complementary goods.

Discuss which measure of the different types of elasticity of demand is most useful for a business when setting the price for its product.[12]