basically need help with the whole packet

ACTIVITY & Consumer Application UNDERSTANDING THE CONSUMER You have learned about several rules and principles that govern supply and demand. Study the rules and their definitions below. Then use them to complete the exercises that follows. 1. Law of demand: If the price of a good or service falls, a larger quantity will be bought, and if the price rises, a smaller quantity will be bought. 2. Law of diminishing marginal utility: Total satisfaction rises with each unit bought, but the amount of additional satisfaction will lessen with each unit. 3. Elasticity of demand: A change in price will cause the quantity demanded for a product to change. Elastic means that quantity demanded will change greatly. Inelastic means that quantity demanded will not change much. Three factors determine whether demand for a product is elastic or inelastic (a) whether the item is a necessity or a luxury; (b) whether the item has substitutes: (c) what amount of income the consumer spends on the item. Rumson's Clothing Store had a successful.two-for-the-price-of-one sale. The owners next tried a three- for-one sale on the remaining clothes. This sale was not nearly as successful. Why? Kemal's Restaurant wanted to increase its lunch business. The owners distributed coupons good for $1 off every lunch order. Business increased by 25 percent. Why? 3. Associated Metal Mills is the only manufacturer of a special machine part. The cost of producing the part increased by 15 percent. Associated Metal raised its price by 15 percent, but demand for the part stayed about the same. Why? The Daily Star, a morning newspaper, raised its price from 30 cents to 35 cents to cover its rising costs. The number of newspapers sold stayed about the same. Why? Better Builders has constructed 20 luxury homes, all priced at $300,000 and above. Only 5 homes have 5. been sold, so the company decides to lower the price by $20,000. As a result 3 more homes are sold in the next month. Why? CONSUMER APPLICATION