Exam 2: The Key Principles of Economics

Steven lives in a big city where there is a shortage of parking.He has a parking spot in his driveway where he parks his car.Which of the following statement is most correct?

The real value of money:

Being self-sufficient in the production of everything we need is efficient.

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 $24.How many hours should Joe stay open?

When two parties engage in voluntary exchange,one must be made worse off.

Suppose that you lend $1,000 to a friend and he or she pays you back one year later.What is the opportunity cost of lending the money?

When you have a job and your employer compensates you for your time with money,resulting in both of you being better off,it is an example of a voluntary exchange.

Table 2.3 -Refer to Table 2.3.The principle of diminishing returns sets in with the addition of the ________ worker.

Suppose that your tuition to attend college is $5,000 per year and you spend $5,000 per year on room and board.If you were working full time,you could earn $22,000 per year.What is your opportunity cost of attending college?

Mark quit his job as a salesman where he made $43,000 per year to start his own t-shirt making business.His business expenses are $6,000 per year on rent,$12,000 per year on supplies,and $4,000 per year on part-time help.As for his personal expenses,his apartment costs him $4,800 per year and his personal bills are an extra $1,200 per year.Which of the following is NOT part of the opportunity cost of running his business?

The economic reason why some individuals choose keep their tuition money and not to go to school is:

If a consumer can buy four pizzas for $24 and five pizzas for $25,then the marginal cost of the fifth pizza is:

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 second new highway built in a year is:

If your salary increases and the cost of goods in stores increase at the same rate,does a unit of money have more or less buying power?

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 Julianne's marginal benefit of staying open per hour is $16.If she is following the marginal principle,how many hours should Julianne stay open?

Figure 2.1 -On the production possibilities curve in Figure 2.1 the opportunity costs of increasing agricultural production from 400 tons to 600 tons is:

Table 2.3 -Refer to Table 2.3.The marginal product of the 3rd worker is:

Jessica,aged three,decides to dress up like Sleeping Beauty for Halloween.What is her opportunity cost of this decision?

Diminishing returns occurs because:

Figure 2.3 -In Figure 2.3,the move from production possibility curve YZ to production possibility curve XV,could be caused by: