Assignment Part 1: Elasticity
If you were working in a gas station and the manager wants to increase the price of gasoline 5%,
(a) What would you tell him about future revenue? (Consider the theory of price elasticity and the specific value of the price elasticity for gasoline provided in the voice over)
(b) What strategies would you recommend with the price of gasoline and the prices of other products sold at the gas station?
Assignment Part 2: Principle of Diminishing Marginal Utility
A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, he can eat as many servings as he desires at no additional cost. Do you think the local restaurant will go bankrupt because people will eat much more than what they are paying for? Why?
Assignment Part 3: News and Microeconomics
This week we introduced key concepts like elasticity, sunk costs, diminishing marginal satisfaction, fixed costs, variable costs, average costs and marginal costs. All these concepts relate to the Demand and Supply of your firm of interest, and these concepts are quantitative in nature. It could be nice if you could include some article that discusses demand elasticity values or costs for the firm you are interested in.