Econ 102 Exam 3 - Version A

A good where one person's enjoyment doesn't reduce another's ability to enjoy it.

Someone who is struggling to afford basic necessities like rent and food.

The belief that a successful outcome in a chance event increases the likelihood of further successes.

When people benefit from a good or service without contributing to its cost, assuming others will pay.

Strategies by companies to encourage high spending and interest charges.

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

The combination of goods and services that provides the highest level of satisfaction to a consumer, given their budget and the prices of goods.

A person who prefers a certain outcome with a lower payoff over a risky outcome with a potentially higher payoff.

A situation where people's choices between gambles contradict expected utility theory, suggesting that people give more weight to certain outcomes than to probabilities.

A theory that suggests people make decisions by weighing the potential utility of each outcome and its probability of occurring.

A strategy where businesses artificially limit the availability of a product to increase demand and perceived value.

The tendency for individuals to avoid choices that might lead to regret or dissatisfaction.

Differences in wages paid to workers for jobs that have different non-monetary characteristics, like risk, location, or unpleasantness.

The amount of money a policyholder must pay out-of-pocket before their insurance begins covering costs.

A measure of income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).

The average outcome of a probabilistic event, calculated by multiplying each possible outcome by its probability and summing the results.

Costs associated with production that are not borne by the producer but by society, such as pollution or traffic congestion.

The principle that as an individual consumes more of a good, the additional satisfaction they derive from each additional unit decreases.

The point where a consumer gets the most satisfaction from their purchases within their budget.

The additional satisfaction gained from spending one more dollar on a specific good.

The reasons for high healthcare spending in the US.

When insurance encourages riskier behavior because the insured party is protected from the full consequences.

When riskier individuals are more likely to buy insurance, leading to higher premiums for everyone.

Insurance priced to cover the expected costs of payouts, including the probability of a claim.

A probability puzzle where switching choices after revealing information improves the odds of winning.

The equilibrium point where the total benefits to society are maximized, considering both private and social costs.