ECON 212 Exam3 Questions and
Answers
utility - Answer-measure of personal satisfaction
util - Answer-hypothetical unit of utility
marginal utility - Answer-good or service is the change in total utility generated by consuming one
additional unit of that good or service
marginal utility curve - Answer-shows how marginal utility depends on the quantity of a good or service
consumed
principle of diminishing marginal utility - Answer-each successive unit of a good or service consumed
adds less to total utility than does the previous unit
budget constraint - Answer-limits the cost of a consumers bundle to no more than the consumer's
income
, consumption posibilities - Answer-the set of a ll consumption bundles that are affordable given the
consumers income and prevailing prices
budget line - Answer-shows the consumption bundles available to a consumer who spends all of his or
her income
optimal consumption bundle - Answer-the consumption bundle that maximizes the consumer's total
utility given his or her budget constraint
marginal utility per dollar - Answer-spent on a good or service is the additional utility from spending one
more dollar on that good or service
optimal consumption rule - Answer-in order to maximize utility, a consumer must equate the marginal
utility per dollar spend on each good and service in the consumption bundle
production function - Answer-the relationship between the quantity of inputs a firm uses and the
quantity of output it produces
fixed input - Answer-quantity fixed for a period of time and cannot be varied
variable input - Answer-quantity the firm can vary at any time
long run - Answer-time period in which all inputs can be varied
short run - Answer-time period in which at least one input is fixed
total production curve - Answer-how the quantity of output depends on the quantity of the variable
input, for a given quantity of the fixed input
Answers
utility - Answer-measure of personal satisfaction
util - Answer-hypothetical unit of utility
marginal utility - Answer-good or service is the change in total utility generated by consuming one
additional unit of that good or service
marginal utility curve - Answer-shows how marginal utility depends on the quantity of a good or service
consumed
principle of diminishing marginal utility - Answer-each successive unit of a good or service consumed
adds less to total utility than does the previous unit
budget constraint - Answer-limits the cost of a consumers bundle to no more than the consumer's
income
, consumption posibilities - Answer-the set of a ll consumption bundles that are affordable given the
consumers income and prevailing prices
budget line - Answer-shows the consumption bundles available to a consumer who spends all of his or
her income
optimal consumption bundle - Answer-the consumption bundle that maximizes the consumer's total
utility given his or her budget constraint
marginal utility per dollar - Answer-spent on a good or service is the additional utility from spending one
more dollar on that good or service
optimal consumption rule - Answer-in order to maximize utility, a consumer must equate the marginal
utility per dollar spend on each good and service in the consumption bundle
production function - Answer-the relationship between the quantity of inputs a firm uses and the
quantity of output it produces
fixed input - Answer-quantity fixed for a period of time and cannot be varied
variable input - Answer-quantity the firm can vary at any time
long run - Answer-time period in which all inputs can be varied
short run - Answer-time period in which at least one input is fixed
total production curve - Answer-how the quantity of output depends on the quantity of the variable
input, for a given quantity of the fixed input
