NAME: ________________________

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5 Written Questions

5 Matching Questions

  1. selller's reservation price
  2. buyer's reservation price
  3. normal good
  4. economic efficiency
  5. price ceiling
  1. a condition that occurs when all goods and services are produced and consumed at their respective socially optimal levels
  2. b the smallest amount for which a seller would be willing to sell am additional unit generally equal to the marginal cost
  3. c a good for which, other things equal, an increase in income leads to an increase in demand
  4. d the largest dollar amount the buyer would be willing to pay for a good
  5. e a maximum price that can be legally charged for a good or service

5 Multiple Choice Questions

  1. the quantity supplied and the quantity demanded at the equilibrium price
  2. a situation in which quantity demanded equals quantity supplied
  3. when consumers react to an increase in a good's price by consuming less of that good and more of other goods
  4. the world of commercial activity where goods and services are bought and sold
  5. when quantity supplied is more than quantity demanded

5 True/False Questions

  1. total surplusThe difference between the buyer's reservation price and the seller's reservation price

          

  2. socially optimal quantityThe quantity of a good that results in the maximum possible economic surplus from producing and consuming the good.

          

  3. supply curvea graph of the relationship between the price of a good and the quantity supplied

          

  4. income effecttwo goods that are bought and used together

          

  5. change in supplya change in the quantity demanded of a good or service at every price; a shift of the demand curve to the left or right.

          

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