Reference no: EM133185610
Discussion 1.
Diminishing Marginal Utility
1. Pretend that you have just been surprised with a genuine email that says you have just been selected by your favorite pizza delivery company that every day for the next month you will receive your favorite pizza for lunch and another of that same favorite pizza for dinner, delivered to your home and ready to eat.
a. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning.
b. What about your excitement on the 10th day?
c. What about your excitement on the 30th day?
2. Now, pretend that your favorite national brand gasoline company informs you that you have won as much as you want free gasoline, as much as you want, from any of their gas stations, anywhere in the country every day for a year.
a. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning
b. What about your excitement on the 10th day?
c. What about your excitement on the 30th day?
3. Again, considering the concept of utility, what makes these two scenarios different?
Discussion 2.
Tailored Clothes
1. Assume that you were ready to buy a custom tailored dress (or men's suit) and you are prepared to pay up to $200 for it. Also assume that the tailor is prepared to sell that item of clothing for as little as $100. When you arrive at the tailor shop, the posted price for the item is $150. Discuss how this scenario relates to producer and consumer surplus and how such surpluses, if any, affect buying and manufacturing decisions.
2. Discuss any recent purchases you have made and for which you feel that a similar rationale seemed to be at work.
Discussion 3.
Prescription Medications
Critically analyze the pros and cons of putting a price ceiling on prescription medicine. Make sure to use concepts from the chapter in this unit such as government intervention, inefficiencies, price elasticity, etc. in your answer.
a. In the first case, assume the medication is for a life threatening illness for which your child has been diagnosed.
b. In a second case, assume the medication is for an improved quality of life issue, such as achieving a healthy weight.
c. What are the impacts that the pharmaceutical company that makes the medications in question will experience? How will that affect the pharmaceutical company's production decisions? What about its decisions to conduct further research into new drugs?