Exam 2: The Key Principles of Economics

Producing more output in an existing production facility by increasing the number of workers sharing the facility will bring into effect the principle of ________.

If a consumer can buy four DVDs for $44 and five DVDs for $50,then the marginal cost of the fifth DVD is:

The principle of diminishing returns implies that when one input increases while the other inputs are held fixed,output: beyond some point will exhibit:

If real salaries decrease but nominal salaries do not,this means that:

The extra benefit resulting from a small increase in some activity is called the:

Figure 2.3 -In Figure 2.3,point B:

The principle of diminishing returns occurs:

Using figures from the Application,the opportunity cost of running your business:

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.As the group cleans more houses,the opportunity cost of cleaning houses:

Suppose that your tuition to attend college is $10,000 per year and you spend $4,000 per year on room and board.If you were working full time instead of attending college,you could earn $20,000 per year.What is your opportunity cost of attending college for one year?

Pat claims to save a great deal of money on groceries by traveling to various supermarkets to make her purchases at their advertised sale prices.She might visit as many as five different stores in one day in order to complete her weekly shopping.Her savings are not as great as she may think they are if she does not consider the:

According to the application,if Jasper Johns earns $5,000 per day painting art and $1,500 per day painting houses,he should:

The marginal principle states that "we should increase the level of an activity as long as:

The marginal output of labor is the amount of output that can be produced if one more unit of labor is added.

Suppose your bank pays you 5% interest per year on your savings account.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?

Recall Application 1,"Don't Forget the Costs of Time and Invested Funds," to answer the following questions. -According to the Application,the opportunity cost of your time should be ________ the opportunity cost of your invested funds.

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 we observe Joe staying open 6 hours per day.If he is following the marginal principle,what must his marginal cost be?

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 second house in a day is:

As bags of nitrogen applied went from 0 to 1 to 2 to 3 to 4,crop yield went from 85 to 120 to 135 to 144 to 147 bushels per acre.The results show that as more bags of nitrogen were added,holding all other inputs constant,output:

The only way individuals can cope with scarcity is by being self-sufficient.