ECO 2023 Exam 2 || A+ Graded Already.

Law of diminishing marginal utility correct answers The basic economic principle that as the consumption of a product increases, the marginal utility derived from consuming more of it (per unit of time) will eventually decline marginal utility correct answers the additional utility, or satisfaction, derived from consuming an additional unit of a good marginal benefit correct answers the maximum price a consumer will be willing to pay for an additional unit of a product. It is the dollar value of the consumer's marginal utility from the additional uit, and therefore falls as consumption increases subsitution effect correct answers that part of an increase (decrease) in amount consumed that is the result of a good being cheaper (more expensive) in relation to other goods because of a reduction (increase) in price income effect correct answers that part of an increase (decrease) in amount consumed that is the result of the consumer's real income being expanded (contracted) by a reduction (rise) in the price of a good price elasticity of demand equation correct answers percentage change in quantity demanded/ percentage change in price price elasticity of demand correct answers how responsive consumers are to a change in a product's price (see equation) income elasticity correct answers the percentage change in the quantity demanded divided by the percentage change in consumer income that caused the change in quantity demanded. It measures the responsivness of the demand for a good to a consumer's change in income. normal good correct answers a good that has a positive income elasticity, so that as consumer income rises, demand for the good rises, too inferior good correct answers a good that has a negative income elasticity, so that as consumer income rises, the demand for the good falls price elasticity of supply correct answers the percentage change in quantity supplued, divided by the percentage change in the price that caused the change in quantity supplied resididual claimants correct answers individuals who personally receive the excess if any, f revenues ovr costs. they gain if the firm's costs are reduced or revenues increase. team production correct answers a production process in which employees work together under the supervision of the owner or the owner's representative.