Exam 2: The Key Principles of Economics

Table 2.4 -The firm depicted in Table 2.4 is likely to face diminishing returns because:

When you voluntarily accept a job and exchange your labor for money:

Suppose that a house painter can earn $200 per day painting houses and painting Jasper Johns' house requires 25 days of labor.According to the application,if Jasper Johns earns $5,000 per day painting art,then he must:

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 first house in a day is:

The face value of money or income is called its ________ value.

When two people engage in voluntary trade:

An unemployed individual decides to spend the day fishing.The opportunity cost of fishing is equal to:

Consider a firm that is trying to determine how many hours to remain open in a day.How would the firm make this decision?

Different people eat different amounts of food when they go to buffet restaurants,even though they all pay the same price.Explain how this relates to the marginal principle.

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

The additional cost resulting from a small increase in some activity is called the:

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 $32.How many hours should Joe stay open?

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 5 hours per day.If she is following the marginal principle,what must her marginal benefit be?

According to the principle of diminishing returns,if the number of workers is increased beyond the point of diminishing returns,then the additional worker:

Two parties engage in exchange when each one expects to be made better off by the exchange.

When a firm hired its tenth worker,its factory output increased by four units per month.Would you expect the firm's output to increase by eight more units per month if the firm hired two more workers?

Suppose prices increase by 4% per year.What nominal percentage return on your savings account would you require to get a 1% real return?

Tradeoffs involve an exchange of one thing for another because resources are limited and can be used in different ways.

Based on the Application,the marginal cost of sailing a ship faster is:

Table 2.4 -Refer to Table 2.4.The principle of diminishing returns sets in with the addition of the ________ tank of fertilizer.