Exam 2: The Key Principles of Economics

The additional cost resulting from a one unit increase in the production of a good is known as the ________.

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people with medical care in a given year.The opportunity cost of the fourth new highway built in a year is:

Figure 2.4 -Joe runs a business and needs to decide how many hours to stay open.Figure 2.4 illustrates his marginal benefit of staying open for each additional hour.Suppose that Joe's marginal cost of staying open per hour is $40.How many hours should Joe stay open?

According to the marginal principle,an individual will do best by producing or consuming where:

The application shows that high inflation results in fewer years to pay back student loans because:

Table 2.4 -Refer to Table 2.4.The marginal product of the 2nd tank of fertilizer is:

When Bob has to give up lunch in order to have a fancy dinner,the economic principle that is highlighted by his situation is the:

You borrow money to buy a house in 2006 at a variable interest rate of 6.5%.Your interest rate is always 2% more than the rate of inflation.By 2009,the inflation rate has risen to 8.5%.Considering only your mortgage,is inflation good news or bad news for you?

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people with medical care in a given year.The opportunity cost of the third new highway built in a year is:

You borrow money to buy a house in 2006 at a fixed interest rate of 6.5%.By 2009,the inflation rate has risen to 8.5%.Considering only your mortgage,is inflation good news or bad news for you?

Table 2.2 -Julianne runs a business and needs to decide how many hours to stay open.Table 2.2 illustrates her marginal costs of staying open for each additional hour.Suppose that we observe Julianne staying open 3 hours per day.If she is following the marginal principle,what must her marginal benefit be?

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people with medical care in a given year.The reason why the production possibilities curve is shaped as it is (bowed outward)is because inputs for healthcare and highways are:

According to the principle of diminishing returns,an additional worker decreases total output.

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people with medical care in a given year.The opportunity cost of the fourth new highway built in a year is:

What does an increase in prices in retails stores do to the real value of the money you earn as wages?

Table 2.1 -A group of people has formed a house cleaning and yard maintenance business.The number of houses or yards that they can clean or maintain in any given day is depicted in Table 2.1.The opportunity cost of cleaning the third house in a day is:

The weekly income earned in 2011 at that time could buy ________ standard baskets of goods and services.

An increase in the wages received by lawyers in general will result in an increase in the opportunity cost of law school.

People acting in their own self interest try to gain at the expense of others in exchange leads to someone necessarily losing in a voluntary exchange.

Suppose your bank pays you 6% interest per year on your savings account,so that $100 grows to $106 over a one-year period.If prices increase by 3% per year over that time,approximately how much real value do you gain by keeping $100 in the bank for a year?