Question 1

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

Accepted Answer

A)  increased unemployment. 
B)  a decline in technology. 
C)  more land, labor or capital. 
D)  all of the above. 
A)  increased unemployment. 
B)  a decline in technology. 
C)  more land, labor or capital. 
D)  all of the above.

Question 2

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:

Accepted Answer

A)  perfectly substitutable. 
B)  substitutable, but not perfectly substitutable. 
C)  not substitutable at all. 
D)  used in precisely the same ratios. 
A)  perfectly substitutable. 
B)  substitutable, but not perfectly substitutable. 
C)  not substitutable at all. 
D)  used in precisely the same ratios.

Question 3

If an economy is fully utilizing its resources, it can produce more of one product only if it:

Accepted Answer

A)  adds more people to the labor force. 
B)  doubles manufacturing of the product. 
C)  produces less of another product. 
D)  reduces the prices of the most expensive products. 
A)  adds more people to the labor force. 
B)  doubles manufacturing of the product. 
C)  produces less of another product. 
D)  reduces the prices of the most expensive products.

Question 4

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

Accepted Answer

A)  zero, because the person doesn't have a job. 
B)  the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time. 
C)  the cost of bait and any other monetary expenses. 
D)  the value of the individual's wages while he was working. 
A)  zero, because the person doesn't have a job. 
B)  the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time. 
C)  the cost of bait and any other monetary expenses. 
D)  the value of the individual's wages while he was working.

Question 5

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

Accepted Answer

The answer of Producing more output in an existing production...

Question 6

Marginal cost is the additional cost resulting from a large or small increase in some activity.

Accepted Answer

The answer of Marginal cost is the additional cost resulting...

Question 7

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 figure shows that as more highways are built, the opportunity cost of building each additional highway is:

Accepted Answer

A)  decreasing and then increasing. 
B)  decreasing. 
C)  increasing. 
D)  constant. 
A)  decreasing and then increasing. 
B)  decreasing. 
C)  increasing. 
D)  constant.

Question 8

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

Accepted Answer

A)  7% 
B)  0% 
C)  5% 
D)  2% 
A)  7% 
B)  0% 
C)  5% 
D)  2%

Question 9

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions:
-According to the application, if the nominal minimum wage is unchanged while prices fall, then the real minimum wage:

Accepted Answer

A)  falls. 
B)  stays the same. 
C)  is unaffected. 
D)  rises. 
A)  falls. 
B)  stays the same. 
C)  is unaffected. 
D)  rises.

Question 10

Recall Application 3, "Jasper Johns and House Painting," to answer the following questions:
-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:

Accepted Answer

A)  never paint his house. 
B)  paint his house if he can paint it in less than 25 days. 
C)  paint his house if he can paint it in less than a day. 
D)  switch occupations and paint houses only. 
A)  never paint his house. 
B)  paint his house if he can paint it in less than 25 days. 
C)  paint his house if he can paint it in less than a day. 
D)  switch occupations and paint houses only.

Question 11

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?

Accepted Answer

A)  Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot. 
B)  The opportunity cost of using the parking spot is the price he could charge someone else for using the spot. 
C)  The opportunity cost of using the parking spot is zero, because Steven owns the house. 
D)  The opportunity cost depends on how much Steven's mortgage payment is. 
A)  Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot. 
B)  The opportunity cost of using the parking spot is the price he could charge someone else for using the spot. 
C)  The opportunity cost of using the parking spot is zero, because Steven owns the house. 
D)  The opportunity cost depends on how much Steven's mortgage payment is.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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?

Accepted Answer

A)  the real interest rate that would have been earned on the money 
B)  There is no cost. 
C)  the nominal interest rate that would have been earned on the money 
D)  the implicit cost of the money 
A)  the real interest rate that would have been earned on the money 
B)  There is no cost. 
C)  the nominal interest rate that would have been earned on the money 
D)  the implicit cost of the money

Question 14

Suppose that you lend $1,000 to a friend who pays you back $1,100 the next year. Suppose that prices that year rose by 8% and the real rate of return in the stock market was 4%. Your friend says that he or she was being more than fair by giving you more than the rate of inflation as a return. What do you think?

Accepted Answer

The opportunity cost of that money was n

Question 15

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?

Accepted Answer

A)  $13,000 
B)  $35,000 
C)  $27,000 
D)  $30,000 
A)  $13,000 
B)  $35,000 
C)  $27,000 
D)  $30,000

Question 16

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

Accepted Answer

A)  increases at a decreasing rate. 
B)  decreases at a decreasing rate. 
C)  decreases at an increasing rate. 
D)  increases at an increasing rate. 
A)  increases at a decreasing rate. 
B)  decreases at a decreasing rate. 
C)  decreases at an increasing rate. 
D)  increases at an increasing rate.

Question 17

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions:
-According to the application, if the nominal minimum wage is unchanged while prices rise, then the real minimum wage:

Accepted Answer

A)  rises. 
B)  declines. 
C)  is unaffected. 
D)  stays the same. 
A)  rises. 
B)  declines. 
C)  is unaffected. 
D)  stays the same.

Question 18

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

Accepted Answer

A)  marginal cost. 
B)  opportunity cost. 
C)  marginal benefit. 
D)  diminishing returns of the activity. 
A)  marginal cost. 
B)  opportunity cost. 
C)  marginal benefit. 
D)  diminishing returns of the activity.

Question 19

People are interested in how much their money can buy. This is called the _______.

Accepted Answer

real- nomi

Question 20

Recall Application 2, "Why Not Walk Up an Escalator?," to answer the following questions:
-According to the application, the marginal benefit of walking up the escalator:

Accepted Answer

A)  is the benefit of of hearing music played. 
B)  is not using the escalator. 
C)  is the benefit of arriving sooner. 
D)  is the benefit of getting more exercise. 
A)  is the benefit of of hearing music played. 
B)  is not using the escalator. 
C)  is the benefit of arriving sooner. 
D)  is the benefit of getting more exercise.

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

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:

If an economy is fully utilizing its resources, it can produce more of one product only if it:

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

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

Marginal cost is the additional cost resulting from a large or small increase in some activity.

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 figure shows that as more highways are built, the opportunity cost of building each additional highway is:

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

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions: -According to the application, if the nominal minimum wage is unchanged while prices fall, then the real minimum wage:

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?

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

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?

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?

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

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions: -According to the application, if the nominal minimum wage is unchanged while prices rise, then the real minimum wage:

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

People are interested in how much their money can buy. This is called the _______.

Recall Application 2, "Why Not Walk Up an Escalator?," to answer the following questions: -According to the application, the marginal benefit of walking up the escalator:

Introduction: What Is Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 2: The Key Principles of Economics

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

If an economy is fully utilizing its resources, it can produce more of one product only if it:

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

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

Marginal cost is the additional cost resulting from a large or small increase in some activity.

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 figure shows that as more highways are built, the opportunity cost of building each additional highway is:

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

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions: -According to the application, if the nominal minimum wage is unchanged while prices fall, then the real minimum wage:

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?

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

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?

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?

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

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions: -According to the application, if the nominal minimum wage is unchanged while prices rise, then the real minimum wage:

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

People are interested in how much their money can buy. This is called the _______.

Recall Application 2, "Why Not Walk Up an Escalator?," to answer the following questions: -According to the application, the marginal benefit of walking up the escalator:

Introduction: What Is Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters