1.Describe the utility-maximizing condition . Explain why it makes sense.

2.What conditions are necessary for total utility to be positive while marginal utility is negative? (Think all-you-can-eat restaurant.)

3.One luxury goods manufacturer noted that, "Our customers do not want to pay less. If we halved the price of all our products, we would double our sales for six months, and then we would sell nothing." Is there something about luxury goods that suggests consumers are irrational? Do luxury goods not follow the law of demand?

4.Critics of marginal utility analysis argue that it is unrealistic to assume that people make the mental calculus of marginal utility per dollar for large numbers of products. But when you are making a decision to either go to a first-run movie or buy a used DVD of last summer's blockbuster, does this analysis seem so complex? Is it a reasonable representation of your thought process?