Discussion: Ecomonics
• Douglas's marginal rate of substitution is six slices of bread for two Pepsis at the present combination of Pepsi and bread he is consuming. If the price of each Pepsi is $2.00 and the price of a slice of bread is $3.00, is Mr. Douglas maximizing his utility? If not, how should he change his consumption? Briefly explain your response.
• Airlines give away millions of tickets each year through their frequent flyer programs, with the typical airline awarding a free ticket for each 25,000 miles flown on the airline. The average airline ticket costs $500 and is for a 2,500-mile round trip. Given this information, evaluate the following statement: Airlines could have the same effect on demand by eliminating their frequent flyer programs and simply lowering the average ticket price by 10 percent.
• Identify a heuristic (quick rule of thumb) that you have employed when making a decision, whether in business or as a consumer. Were you better off by making the heuristic decision, or would it have been better to follow a longer decision process? Explain briefly.
The response should include a reference list. One-inch margins, Using Times New Roman 12 pnt font, double-space and APA style of writing and citations.