csm 303 final exam

The pattern where each additional unit of a good consumed provides less additional utility than the previous is called:

A. dimiminishing marginal utility

Which of the following is NOT an ethical and/or taste issue facing advertisers?

Advertising to working age adults

Which government agency impacts the advertising industry and its practices?

A. Federal Communications Commission

The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

B. substitution effect

Total Utility

Budget line tells us which combinations of two goods are affordable In the equation, each consumption unit is expected to have slightly less utility as more units are consumed.

The ______ is tasked with oversight of copyright protection issues, like coined phrases that may appear in advertising.

C. Library of Congress

_ requires an insurance policyholder to pay a percentage of a loss, and the insurance company pays the remaining cost.

Coinsurance

_ is a model of consumer-market exchange wherein public policy, consumer organizations, and media play a role

Consumer power model

Banks are required by law to pay a small fraction of their deposits to the _______________, which goes into a __________ fund that is used to repay depositors their money if the bank should go bankrupt.

Federal Deposit Insurance Corporation; deposit insurance

Which agency is responsible for ensuring the safety, efficacy, and security of drugs and medical devices?

Food and Drug Administration (FDA

Federal Communication Commission-

Issues and revokes licenses for radio and television stations.

maximizing utility

If you always choose the item with the greatest marginal utility per dollar spent, when the budget is exhausted, the utility maximizing choice should occur where the marginal utility per dollar spent is the same for both goods.

___________ refers to advertising that exaggerates the characteristics of a product.

Puffery

ATF-

Regulates advertising of alcohol

Financial market

The demanders are buyers of loans are borrowed and their suppliers are lenders

Refer to the budget line shown in the diagram. At point U, __________.

P1/P2 = MU1/MU2

The imposition of a price ceiling on a market often results in:

a shortage

Which of the following is the main goal of advertising?

change attitude or perception change

Advertising encourages _________ and fosters ____________, but it also ultimately costs the consumer.

competition; economic growth

If the cost of production goes down then

consumers will demand more

Your insurance agency decides to not provide coverage for a certain procedure classified as not necessary. This is a(n):

exclusion

An inferior good is a product:

for which demand decreases as income increases.

An insurance company is likely to believe that having a major accident is a signal of being a _____________, and thus try to _________________.

high-risk driver; raise this driver's insurance premiums

Marginal utility

in economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service. Marginal utility is the additional utility provided by one additional unit of consumption. → change in total utility / change in quantity

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.

income effect; higher price

Diminishing marginal utilit

is the common pattern that each marginal unit of a good consumed provides less of an addition to utility than the previous unit As one consumes more of a good, they gain less satisfaction from each additional unit For example, eating your first slice of pizza versus 5th slice of pizza

Limited decision-making :

limited search behavior

When people have insurance against a certain event, the notion that those people are less likely to guard against that event occurring is called a _____________________ .

moral hazard

The exchange process results in a:

transaction

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.

usury laws

Federal Trade Commision

○ Regulates advertising, labeling, and packaging. Issues warnings, requires advertisers to validate claims.

Food and Drug Administration

○ Regulates labeling and packaging, and manufacture of food and drug products.

Labor market

○ The (demand) are the buyers in the productive services of firms and their (suppliers) are the sellers of the workers.

Bonds

○ US Savings, Corporate, Municipal:

Library of Congress

○ Watches over copyright protection issues such as coined phrases and well-known slogans in ads.

Extended decision-making

○ consumer searches for more information before making a decision : car, house

As the interest rate rises

○ consumers will borrow less.

If interest rates increase

○ demand will go down and supply will go up

Perils:

○ events that cause financial loss

Price ceiling

○ in a financial market is a price that is set at a ceiling price that consumers demand. (For example over the counter prescription drugs)

Price floor

○ is the lowest or minimum price that can be paid in a market for goods and services.

Acquisitiveness

○ means a strong desire for things, ideas, and information

Habitual decision-making

○ routine decision-making where choice-making is a habit : coffee

The "law of supply" functions in labor markets; a higher ___________ for labor leads to a higher quantity supplied.

price

When Erin leased her new car, she was required by law to _________ to ______________ of financial loss caused by a vehicle collision.

purchase insurance; reduce the risk

Technological advantages that improve production efficiency will shift the supply curve to the

right

Among the three types of consumer decision-making, which one is characterized by routine choices?

Habitual decision-making

The labor __________ curve(s) will shift ____________ if there is an increase in productivity or an increase in the demand for the final product.

demand; right

During a severe recession, the government issued food stamps that could only be used to acquire food to a greater number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing the food stamps will cause each family's budget constraint line to:

shift to the right.