Exam 2: The Key Principles of Economics

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:

The real value of money:

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

The saying that "There's no such thing as a free lunch" refers to the:

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

Suppose that you own a house. What is the opportunity cost of living in the house?

Figure 2.3 -In Figure 2.3, an efficient production point on production possibility curve YZ is

Recall Application 3, "Jasper Johns and House Painting," to answer the following questions: -According to the application, if Jasper Johns earns $5,000 per day painting art and $1,500 per day painting houses, he should:

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

Opportunity cost is the difference between the benefit and cost of some action.

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.

-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 doing yard work:

The extra benefit 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?

If the government estimates that the marginal cost of building a bridge is $100 million, while the marginal benefit is $150 million, the marginal principle dictates that the government should:

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:

A major league baseball player signs a contract that pays $50 million over five years. The $50 million is its _______value.

Figure 2.3 -In Figure 2.3, point A:

If you remove resources from factory production, the quantity of factory goods will:

A principle is a self- evident truth that most people readily understand and accept.