ECON 202 LATEST EXAMS SCRIPT QUESTIONS
AND ANSWERS SURE A+
✔✔Total Utility - ✔✔The total amount of usefulness gained from consuming a specific
amount of a product.
✔✔Marginal Utility - ✔✔(economics) the amount that utility increases with an increase
of one unit of an economic good or service. MU=Change in total utility/change in
quantity which =1
✔✔Diminishing Marginal Utility - ✔✔successive units of a particular product yield less
and less marginal utility
✔✔Relationship of Marginal Utility to Total Utility - ✔✔Total utility is the marginal utility
for each unit added together. Total utility goes up as each unit goes up.
✔✔Consumer Equilibrium - ✔✔point at which the consumer is most satisfied given its
budget constraint (MUx/Px = MUy/Py=...=MU$)
✔✔Indifference curve analysis and consumer equilibrium - ✔✔Consumer is okay with
certain combinations of two things (i.e. work and leisure time) and this is effected by
how much they want of something else (i.e. money to buy goods)
✔✔Budget Constraint - ✔✔The combination of goods that can be purchased with a
limited amount of income.
✔✔Effects on Total Utility caused by a change in prices or a change in income - ✔✔If
you have more income then your total utility may go up because you are able to buy
more of something and having more makes you more satisfied. If the price goes down
you would also be able to buy more of the good and be more satisfied.
✔✔Marginal Utility of Money - ✔✔Change in the total satisfaction derived from money
that results from one unit of change in the quantity of money.
, ✔✔Goal of the Firm - ✔✔to maximize profits and minimize costs
✔✔Profit Maximization achieved when - ✔✔marginal revenue=marginal cost
✔✔Production when MR=MC < ATC but > AVC - ✔✔Minimizing losses. You are still
making some money just no profit but can cover some costs so you may as well
✔✔Long-Run Cost Curves - ✔✔In the long-run, everything is a variable cost.
✔✔Economies of Scale - ✔✔The phenomenon by which businesses can churn out
products more cheaply and quickly as they grow bigger.
✔✔Diseconomies of Scale - ✔✔a situation in which long run average cost increases as
a firm's output increases
✔✔Constant returns to scale - ✔✔an increase in a firms scale of production has no
effect on costs per unit produced
✔✔Short-run cost curves - ✔✔the changing variable costs, total costs
✔✔Marginal Revenue - ✔✔the additional income from selling one more unit of a good;
sometimes equal to price
✔✔Short-Run Supply Curve - ✔✔portion of it's marginal cost curve that lies above it's
average variable cost curve. As the market price rises, the firm supplies more product in
accordance with the law of supply.
✔✔The Shutdown Point - ✔✔If MC=MC=AVC then you might as well shut down
✔✔Economic Profits - ✔✔total revenue minus total cost, including both explicit and
implicit costs
✔✔Perfect competition - ✔✔The market situation in which there are many sellers in a
market (with similar products) and no seller is large enough to dictate the price of a
product. Easy exit and entrance. Market info readily available.
✔✔Earning Economic Profits in Perfectly Competitive Market - ✔✔When the market is
first established, you gain profits but after awhile there is no economic gain.
✔✔Demand curve of Perfectly Competitive Market - ✔✔Revenue covers costs and
nothing is left over
AND ANSWERS SURE A+
✔✔Total Utility - ✔✔The total amount of usefulness gained from consuming a specific
amount of a product.
✔✔Marginal Utility - ✔✔(economics) the amount that utility increases with an increase
of one unit of an economic good or service. MU=Change in total utility/change in
quantity which =1
✔✔Diminishing Marginal Utility - ✔✔successive units of a particular product yield less
and less marginal utility
✔✔Relationship of Marginal Utility to Total Utility - ✔✔Total utility is the marginal utility
for each unit added together. Total utility goes up as each unit goes up.
✔✔Consumer Equilibrium - ✔✔point at which the consumer is most satisfied given its
budget constraint (MUx/Px = MUy/Py=...=MU$)
✔✔Indifference curve analysis and consumer equilibrium - ✔✔Consumer is okay with
certain combinations of two things (i.e. work and leisure time) and this is effected by
how much they want of something else (i.e. money to buy goods)
✔✔Budget Constraint - ✔✔The combination of goods that can be purchased with a
limited amount of income.
✔✔Effects on Total Utility caused by a change in prices or a change in income - ✔✔If
you have more income then your total utility may go up because you are able to buy
more of something and having more makes you more satisfied. If the price goes down
you would also be able to buy more of the good and be more satisfied.
✔✔Marginal Utility of Money - ✔✔Change in the total satisfaction derived from money
that results from one unit of change in the quantity of money.
, ✔✔Goal of the Firm - ✔✔to maximize profits and minimize costs
✔✔Profit Maximization achieved when - ✔✔marginal revenue=marginal cost
✔✔Production when MR=MC < ATC but > AVC - ✔✔Minimizing losses. You are still
making some money just no profit but can cover some costs so you may as well
✔✔Long-Run Cost Curves - ✔✔In the long-run, everything is a variable cost.
✔✔Economies of Scale - ✔✔The phenomenon by which businesses can churn out
products more cheaply and quickly as they grow bigger.
✔✔Diseconomies of Scale - ✔✔a situation in which long run average cost increases as
a firm's output increases
✔✔Constant returns to scale - ✔✔an increase in a firms scale of production has no
effect on costs per unit produced
✔✔Short-run cost curves - ✔✔the changing variable costs, total costs
✔✔Marginal Revenue - ✔✔the additional income from selling one more unit of a good;
sometimes equal to price
✔✔Short-Run Supply Curve - ✔✔portion of it's marginal cost curve that lies above it's
average variable cost curve. As the market price rises, the firm supplies more product in
accordance with the law of supply.
✔✔The Shutdown Point - ✔✔If MC=MC=AVC then you might as well shut down
✔✔Economic Profits - ✔✔total revenue minus total cost, including both explicit and
implicit costs
✔✔Perfect competition - ✔✔The market situation in which there are many sellers in a
market (with similar products) and no seller is large enough to dictate the price of a
product. Easy exit and entrance. Market info readily available.
✔✔Earning Economic Profits in Perfectly Competitive Market - ✔✔When the market is
first established, you gain profits but after awhile there is no economic gain.
✔✔Demand curve of Perfectly Competitive Market - ✔✔Revenue covers costs and
nothing is left over
