Quiz 5

Question 1

all the consumption bundles available to a consumer who spends all of their income

Answer 1

budget line

Question 2

the cost of a consumer’s consumption bundle cannot exceed the consumer’s income

Answer 2

budget constraint

Question 3

the set of all consumption bundles that are affordable, given a consumer’s income and prevailing prices

Answer 3

consumption possibilities

Question 4

cost that does not depend on the quantity of output produced. It is the cost of the fixed input.

Answer 4

fixed cost

Question 5

the time period in which all inputs can be varied

Answer 5

long run

Question 6

the change in total utility generated by consuming one additional unit of a good or service

Answer 6

marginal utility

Question 7

a graphical representation showing how marginal utility depends on the quantity of a produce consumed

Answer 7

marginal utility curve

Question 8

additional utility from spending one more dollar on a product

Answer 8

marginal utility per dollar

Question 9

the consumption bundle that maximizes the consumer’s total utility given their budget constraint

Answer 9

optimal consumption bundle

Question 10

when a consumer maximizes utility, the marginal utility per dollar spend must be the same for all products in the consumption bundle

Answer 10

optimal consumption rule

Question 11

the proposition that each successive unit of a product consumed adds less to total utility than does the previous unit

Answer 11

principle of diminishing marginal utility

Question 12

the time period in which at least one input is fixed

Answer 12

short-run

Question 13

a measure of the satisfaction derived from consumption of products

Answer 13

utility (of a consumer)

Question 14

a unit of utility

Answer 14

util

Question 15

the distribution of the tax burden

Answer 15

tax incidence

Question 16

tax that doesn’t depend on the taxpayer’s income

Answer 16

lump-sum tax

Question 17

losses associated with quantities of output that are greater than or less than the efficient level, as can result from market intervention such as taxes, or from externalities such as pollution

Answer 17

deadweight loss

Question 18

the resources used (which is a cost) by government to collect the tax, and by taxpayers to pay it, over and above the amount of the tax, as well as to evade it

Answer 18

administrative costs