Managerial Economics and Strategy, 2/e

4 Consumer Choice

If this is coffee, I’d like some tea; but if this is tea, please bring me some coffee.

Learning Objectives

1. Show how rationality limits a consumer’s possible choices.

2. Predict the effects of price and income changes on consumer choice.

3. Derive demand curves from underlying consumer preferences.

4. Explain the role of behavioral biases in consumer choice.

Managerial Problem Paying Employees to Relocate

When Google wants to transfer an employee from its Washington, D.C., office to its London branch, it has to decide how much compensation to offer the worker to move. International firms are increasingly relocating workers throughout their home countries and internationally.

As you might expect, workers are not always enthusiastic ...