Econ B 251 Exam #2 questions and
answers
What are goods in which when demand increases, income increases?Normal
goods
What are goods in which when demand decreases, income increases?Inferior
goods
What is maximizing happiness or satisfaction from consuming a bundle of goods and
...
Econ B 251 Exam #2 questions and
answers
What are goods in which when demand increases, income increases?✔✔Normal
goods
What are goods in which when demand decreases, income increases?✔✔Inferior
goods
What is maximizing happiness or satisfaction from consuming a bundle of goods and
services subject to income and prices?✔✔Consumer optimum
What is the price of good in terms of another good?✔✔Relative price
What is the total benefit (happiness) received from consuming some goods?✔✔Total
utility
What is the change in total utility received from consuming one more unit of a
good?✔✔Marginal utility
What is it called when producing a good or service up to the point where the last unit
provides a marginal benefit to consumers equal to the marginal cost of making
it?✔✔Efficient
What is a distribution of goods and services among people in a society considered
fair and just?✔✔Equitable
What is the distribution of goods and services using markets and prices in the most
efficient way, not the fairest?✔✔Price rationing
What is the fairest or equitable way to distribute goods but not the most
efficient?✔✔Non-price rationing
What is the main form of price rationing?✔✔Market price
What is the difference between the amount the buyer is willing and able to pay minus
the price they have to pay?✔✔Consumer Surplus
What is the difference between the market price the seller receives minus the
amount they are willing and able to accept?✔✔Producer Surplus
What is the difference between total revenue and total cost?✔✔Profit
What is a market in which there are so many buyers and sellers no one can
influence the market price?✔✔Perfect competitive market
, What is when Quantity demanded = Quantity supplied?✔✔Equilibrium
What is producing all goods up to the point where the last unit provides a marginal
benefit to consumers equal to the marginal cost of producing?✔✔Allocative
efficiency
What is a cost to society from the loss of economic efficiency when it does not
achieve allocative efficiency?✔✔Dead-weight loss
What is a situation in which the allocation of goods and services by a free market is
not allocating efficiently?✔✔Market failure
What is a production amount below (left) of the allocative efficiency
quantity?✔✔Underproduction
What is a production amount above (right) of the allocative efficiency
quantity?✔✔Overproduction
What is making choices to achieve the highest level of satisfaction or
happiness?✔✔Utility maximization
What is maximizing the well-being of all people in society?✔✔Utilitarianism
What measures the amount of happiness?✔✔Utils
What is a limit on how high a price to charge, set below equilibrium, creates a
shortage?✔✔Price ceiling
What is a limit on how low a price to charge, set above equilibrium, creates a
surplus?✔✔Price floor
What are good's price above or below the government's set price?✔✔Black market
What is the time and effort (cost) it takes to complete a transaction with another
market participant?✔✔Search activity
What 3 things does the demand curve represent?✔✔1. Demand
2. Marginal Benefit
3. Willingness to pay
What 3 things does the supply curve represent?✔✔1. Supply
2. Marginal Cost
3. Minimum supply price
What is the equation for total benefit?✔✔Total cost + Total consumer surplus
What is a limit set on the quantity supplied of a good?✔✔Quotas
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