Econ 212 Exam 2 || WITH COMPLETE SOLUTIONS
Short Run correct answers a period of time when plant capacity and the number of firms in
the industry cannot change.
The Long Run correct answers a period of time long enough for firms to alter their plant
capacity and for the number of firms in the industry to change.
Elastic supplies are very responsive to ________ __________ correct answers price changes
Deadweight loss correct answers The loss in consumer and producer surplus due to
inefficiency because some transactions cannot be made and therefore their value to society is
lost.
When price elasticity of demand is elastic, consumers bear a ________ burden of taxes while
more is borne by sellers. correct answers smaller
When the price elasticity of supply is elastic, buyers bear a __________ burden of taxes.
correct answers larger
Elastic supplies lead to a _________ deadweight loss correct answers larger
Marginal Utility Analysis correct answers A theoretical framework underlying consumer
decision making. The approach assumes that satisfaction can be measured and that consumers
maximizes satisfaction when the marginal utilities per dollar are equal for all products and
services.
Budget Line correct answers Graphically illustrates the possible combinations of two goods
that can be purchased with a given income, given the prices of both products.
Utility correct answers a hypothetical measure of consumer satisfaction
Total utility correct answers the total satisfaction that a person receives from consuming a
given amount of goods and services
Marginal utility correct answers The satisfaction received from consuming an additional unit
of a given product or service.
Law of diminishing marginal utility correct answers As we consume more of a given product,
the added satisfaction we get from consuming an additional unit declines
Utility maximizing rule correct answers Utility is maximized where the marginal utility per
dollar is equal for all products
Firm correct answers an economic institution that transforms inputs, or factors of production,
into outputs, or products of consumers.
Equation for Profit correct answers Total revenue- total cost
Short Run correct answers a period of time when plant capacity and the number of firms in
the industry cannot change.
The Long Run correct answers a period of time long enough for firms to alter their plant
capacity and for the number of firms in the industry to change.
Elastic supplies are very responsive to ________ __________ correct answers price changes
Deadweight loss correct answers The loss in consumer and producer surplus due to
inefficiency because some transactions cannot be made and therefore their value to society is
lost.
When price elasticity of demand is elastic, consumers bear a ________ burden of taxes while
more is borne by sellers. correct answers smaller
When the price elasticity of supply is elastic, buyers bear a __________ burden of taxes.
correct answers larger
Elastic supplies lead to a _________ deadweight loss correct answers larger
Marginal Utility Analysis correct answers A theoretical framework underlying consumer
decision making. The approach assumes that satisfaction can be measured and that consumers
maximizes satisfaction when the marginal utilities per dollar are equal for all products and
services.
Budget Line correct answers Graphically illustrates the possible combinations of two goods
that can be purchased with a given income, given the prices of both products.
Utility correct answers a hypothetical measure of consumer satisfaction
Total utility correct answers the total satisfaction that a person receives from consuming a
given amount of goods and services
Marginal utility correct answers The satisfaction received from consuming an additional unit
of a given product or service.
Law of diminishing marginal utility correct answers As we consume more of a given product,
the added satisfaction we get from consuming an additional unit declines
Utility maximizing rule correct answers Utility is maximized where the marginal utility per
dollar is equal for all products
Firm correct answers an economic institution that transforms inputs, or factors of production,
into outputs, or products of consumers.
Equation for Profit correct answers Total revenue- total cost
