SAMPLE ESSAY QUESTIONS
1. Explain what is meant by a consumer’s equilibrium and how it is related to the demand for a
product.
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2. Explain why indifference curves are usually drawn convex to the origin, are downward
sloping and do not cross each other.
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3. Explain, with the aid of a diagram, diminishing marginal utility and its link to indifference
curve.
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4. Use indifference curve analysis to distinguish between the effects of an increase
the effect of an increase in income on consumer’s demand for a normal good and
inferior good.
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5. Indifference curve analysis refers to income and substitution effects. Explain
what these effects are and discuss whether they might be the major influence for a
manufacturer intending to change the price of a product.
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6. Discuss whether that theory is still valid if the producer decides to advertise the
product, and consider the effects of the advertising on the demand curve for the
product
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7. Explain the meaning of, and the relationship between, diminishing returns, total
product and marginal cost. Use a diagram to illustrate your answer.
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8. What relation is there, if any, between the law of diminishing returns and
internal and external economies of scale
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9. Consider whether increasing a company’s scale of production will always reduce
its costs
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