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
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
