1. From the perspective of the firm, what is the purpose of advertising? Discuss an effective, in your opinion, advertising campaign.
2. What is demand elasticity, and what factors determine its size? Using a product example, discuss how the elasticity concept if used?
3. What is the law of diminishing marginal utility? Give a personal example.
4. What is the principal-agent problem and how does it affect the operation of the firm? Have you ever experienced this dilemma, from either side — as the principal or the agent? Explain.
5. What are explicit and implicit costs, and how do they guide the behavior of the firm? How does economic profit differ from accounting profit, and what role does it play? In your opinion should the firm base its decisions on accounting profit or upon economic profit?
6. Explain the law of diminishing returns. Provide an example case.