PUP 3002 Chapter 3 FSU Exam Questions with Correct Answers Graded A+
normative criteria - Answers criteria which focuses on what the state of the world should be
positive criteria - Answers criteria which focuses on what the state of the would is
Pareto improvement - Answers when you can change allocation of goods to make at least one
individual better off without making any other individuals worse off
Pareto efficient - Answers an allocation to which no further Pareto improvements can be made
Kaldor-Hicks improvement - Answers achieved if the beneficiaries of a proposed alternative
could hypothetically compensate those who are likely to be made worse off
compensation principle - Answers The notion that beneficiaries of some alternative are able to
hypothetically compensate those worse off
market - Answers any institution or operation wherein individuals can trade goods, services or
information
determinants of supply - Answers technology, factor prices, productive capacity
change in supply - Answers when a determinant of supply changes (shifting curve)
determinants of demand - Answers buyer's income, value of other substitutes
change in demand - Answers when a determinant of demand changes (shifting curve)
market equilibrium price - Answers when the price of a good is established via perfect
competition under the condition that the demand for the good exactly equals the supply of the
good
property rights - Answers the exclusive right to determine how a resource or property is to be
used
rivalrous good - Answers a good whose use or consumption will limit or eliminate the supply of
that specific good to others
non-rivalrous good - Answers a good whose use does not deplete the availability of the good
excludable good - Answers a good whose use or consumption by others can be restricted by the
owner of the good
non-excludable good - Answers a good whose access cannot be or is exceedingly difficult to
deny, regardless of who owns the good
Private Good - Answers goods that are both rivalrous and excludable (food, clothing)
normative criteria - Answers criteria which focuses on what the state of the world should be
positive criteria - Answers criteria which focuses on what the state of the would is
Pareto improvement - Answers when you can change allocation of goods to make at least one
individual better off without making any other individuals worse off
Pareto efficient - Answers an allocation to which no further Pareto improvements can be made
Kaldor-Hicks improvement - Answers achieved if the beneficiaries of a proposed alternative
could hypothetically compensate those who are likely to be made worse off
compensation principle - Answers The notion that beneficiaries of some alternative are able to
hypothetically compensate those worse off
market - Answers any institution or operation wherein individuals can trade goods, services or
information
determinants of supply - Answers technology, factor prices, productive capacity
change in supply - Answers when a determinant of supply changes (shifting curve)
determinants of demand - Answers buyer's income, value of other substitutes
change in demand - Answers when a determinant of demand changes (shifting curve)
market equilibrium price - Answers when the price of a good is established via perfect
competition under the condition that the demand for the good exactly equals the supply of the
good
property rights - Answers the exclusive right to determine how a resource or property is to be
used
rivalrous good - Answers a good whose use or consumption will limit or eliminate the supply of
that specific good to others
non-rivalrous good - Answers a good whose use does not deplete the availability of the good
excludable good - Answers a good whose use or consumption by others can be restricted by the
owner of the good
non-excludable good - Answers a good whose access cannot be or is exceedingly difficult to
deny, regardless of who owns the good
Private Good - Answers goods that are both rivalrous and excludable (food, clothing)
