Chapter 7

Question 1

Consumer sovereignty

Answer 1

Econ goods and services produced according to consumer demand

Question 2

Maximum output from minimum input

Answer 2

Max output from given inputs and max consumer satisfaction from that output

Question 3

Costs or benefits which have social significance efficiency

Question 4

Allocative efficiency

Answer 4

a property of an efficient market whereby all goods and services are optimally distributed among buyers in an economy

Question 5

Merit goods

Answer 5

goods with external benefits

Question 6

Demerit goods

Answer 6

goods with external dis-benefits

Question 7

Public goods

Answer 7

goods which are non-excludable and non-rival

Question 8

Concentration ratio

Answer 8

percentage of market share held by top companies

Question 9

Monopoly

Answer 9

one seller, barriers to entry

Question 10

Oligopoly

Answer 10

a small number of powerful sellers

Question 11

Monopolistic competition

Answer 11

many buyers and sellers, freedom of entry and exit, products differentiated

Question 12

Product differentiation

Answer 12

real or notional differences between products of competing firms

Question 13

Price discrimination

Answer 13

selling the same product at different prices to different market segments

Question 14

Externalities

Answer 14

situations when the effect of production or consumption of goods and services imposes costs or benefits on others which are not reflected in the prices charged for the goods and services being provided