Question 1

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

Accepted Answer

A)  1st 
B)  2nd 
C)  3rd 
D)  4th

Question 2

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 $20.If she is following the marginal principle,how many hours should Julianne stay open?

Accepted Answer

A)  4 hours 
B)  5 hours 
C)  6 hours 
D)  7 hours

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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?

Accepted Answer

A)  $0 
B)  $3 
C)  $6 
D)  $106

Question 6

If the weekly income from 1974 to 2015 increased from $80 to $290,but the number of standard baskets of goods that the weekly income could purchase decreased from 1.70 to 1.23 from 1974 to 2015,then we can conclude that

Accepted Answer

A)  prices decreased faster than the wage increase between 1974 and 2015. 
B)  prices increased faster than the wage increase between 1974 and 2015. 
C)  prices increased slower than the wage increase between 1974 and 2015. 
D)  prices decreased slower than the wage increase between 1974 and 2015.

Question 7

In order to go to college,James incurs an opportunity cost even though all he gave up was a full time job as a clerk at Wally World.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  1 yard maintained. 
B)  2 yards maintained. 
C)  3 yards maintained. 
D)  18 yards maintained.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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?

Accepted Answer

The answer of If your salary increases and the cost...

Question 11

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

Accepted Answer

A)  increases total output by the same amount as previous workers. 
B)  increases total output by more than the amount of previous workers. 
C)  increases total output by less than the amount of previous workers. 
D)  decreases total output.

Question 12

Table 2.3
-Refer to Table 2.3.The marginal product of the 4th worker is

Accepted Answer

A)  100 units of output. 
B)  80 units of output. 
C)  60 units of output. 
D)  40 units of output.

Question 13

Figure 2.2
-Figure 2.2 presents a production possibilities curve for a given year for a country that can either produce highways or provide people with medical care.The figure shows that the production possibilities curve is

Accepted Answer

A)  bowed inward. 
B)  bowed outward. 
C)  a straight line. 
D)  bowed inward and then outward.

Question 14

Recall the Application about Rory McIlroy and weed-whacking to answer the following question(s). The Application assumes that Rory McIlroy could whack down all the weeds on his estate in one hour at an opportunity cost of $1,000, but it would take 20 hours for a gardener to do it at a price of $10 per hour.
-Based on the assumptions in the Application,Rory McIlroy would be indifferent to hiring a gardener and whacking the weeds himself if the hourly rate for a gardener was

Accepted Answer

A)  $10. 
B)  $200. 
C)  $800. 
D)  $1,000

Question 15

The real value of money

Accepted Answer

A)  is another word for the face value. 
B)  reflects the purchasing power of the sum of money. 
C)  matters less to people than its nominal value. 
D)  Both B and C are correct.

Question 16

A firm produces its product using both capital and labor.When it does not change its capital usage,but doubles its labor input,its output increases by less than 50%.Which of the following is the most likely explanation of this finding?

Accepted Answer

A)  the principle of opportunity cost 
B)  the principle of diminishing returns 
C)  the marginal principle 
D)  the spillover principle

Question 17

Figure 2.2
-Figure 2.2 presents a production possibilities curve for a given year for a country that can either produce highways or provide people with medical care.The opportunity cost of the second new highway built in a year is ________ people provided with medical care.

Accepted Answer

A)  30,000 
B)  40,000 
C)  50,000 
D)  500,000

Question 18

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

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same but their price will decrease. 
D)  be diverted to other production.

Question 19

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 doing yard work

Accepted Answer

A)  falls. 
B)  rises. 
C)  stays the same. 
D)  becomes equal to the opportunity cost of cleaning houses.

Question 20

According to the marginal principle,an individual will do best by producing or consuming where

Accepted Answer

A)  marginal benefit exceeds total benefits. 
B)  marginal benefit is less than marginal cost. 
C)  marginal benefit equals marginal cost. 
D)  total benefit equals total cost.

Exam 2: The Key Principles of Economics

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

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

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

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?

If the weekly income from 1974 to 2015 increased from $80 to $290,but the number of standard baskets of goods that the weekly income could purchase decreased from 1.70 to 1.23 from 1974 to 2015,then we can conclude that

In order to go to college,James incurs an opportunity cost even though all he gave up was a full time job as a clerk at Wally World.

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

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

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?

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

Table 2.3 -Refer to Table 2.3.The marginal product of the 4th worker is

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a given year for a country that can either produce highways or provide people with medical care.The figure shows that the production possibilities curve is

The real value of money

A firm produces its product using both capital and labor.When it does not change its capital usage,but doubles its labor input,its output increases by less than 50%.Which of the following is the most likely explanation of this finding?

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a given year for a country that can either produce highways or provide people with medical care.The opportunity cost of the second new highway built in a year is ________ people provided with medical care.

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

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 doing yard work

According to the marginal principle,an individual will do best by producing or consuming where