Question 1

Points outside the production possibilities curve represent combinations of products that are

Accepted Answer

A)  attainable only if the economy's resources are fully employed. 
B)  attainable only if the economy's resources are not fully employed. 
C)  attainable if the economy's resources are either fully employed or not fully employed. 
D)  unattainable. 
A)  attainable only if the economy's resources are fully employed. 
B)  attainable only if the economy's resources are not fully employed. 
C)  attainable if the economy's resources are either fully employed or not fully employed. 
D)  unattainable.

Question 2

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application.
Fertilizer and Corn Yield
  
-Refer to the table above. After applying the second bag of fertilizer, the farmer experienced

Accepted Answer

A)  increasing returns. 
B)  diminishing returns. 
C)  constant returns. 
D)  negative returns. 
A)  increasing returns. 
B)  diminishing returns. 
C)  constant returns. 
D)  negative returns.

Question 3

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application.
Fertilizer and Corn Yield
  
-Explain the concept of diminishing returns.

Accepted Answer

The principle of diminishing returns sho

Question 4

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

Accepted Answer

A)  marginal principle. 
B)  spillover principle. 
C)  principle of opportunity cost. 
D)  reality principle. 
A)  marginal principle. 
B)  spillover principle. 
C)  principle of opportunity cost. 
D)  reality principle.

Question 5

Table 2.4
  
-Refer to Table 2.4. Increasing the tanks of fertilizer from 4 to 5 will

Accepted Answer

A)  increase truckloads of potatoes. 
B)  decrease truckloads of potatoes. 
C)  have no effect on truckloads of potatoes. 
D)  require more acres of land. 
A)  increase truckloads of potatoes. 
B)  decrease truckloads of potatoes. 
C)  have no effect on truckloads of potatoes. 
D)  require more acres of land.

Question 6

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s).
-Saving time by driving faster is an example of a ________ of driving faster. Increasing the severity of injuries from a potential accident due to driving faster is a(n)________ of driving faster.

Accepted Answer

A)  nominal cost; real cost 
B)  marginal cost; nominal cost 
C)  marginal benefit; marginal cost 
D)  normative benefit; opportunity cost 
A)  nominal cost; real cost 
B)  marginal cost; nominal cost 
C)  marginal benefit; marginal cost 
D)  normative benefit; opportunity cost

Question 7

The opportunity cost of something is the nominal price paid for the product.

Accepted Answer

A) True 
 B)False

Question 8

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s).
-The use of seat belts and other automobile safety features making bicycling more hazardous can be explained by the economic concept known as

Accepted Answer

A)  the real-nominal principle. 
B)  the marginal principle. 
C)  the principle of voluntary exchange. 
D)  the principle of diminishing returns. 
A)  the real-nominal principle. 
B)  the marginal principle. 
C)  the principle of voluntary exchange. 
D)  the principle of diminishing returns.

Question 9

Jacinda quit her job as a blackjack dealer where she made $42,000 per year to start her own florist business. Her business expenses are $14,000 per year on rent, $21,000 per year on supplies, and $9,000 per year on part time help. As for her personal expenses, her apartment costs her $12,000 per year and her personal bills are an extra $6,000 per year. What is Jacinda's opportunity cost of running the business?

Accepted Answer

A)  $104,000 
B)  $86,000 
C)  $62,000 
D)  $44,000 
A)  $104,000 
B)  $86,000 
C)  $62,000 
D)  $44,000

Question 10

-Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 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?

Accepted Answer

A)  3 hours 
B)  4 hours 
C)  5 hours 
D)  6 hours 
A)  3 hours 
B)  4 hours 
C)  5 hours 
D)  6 hours

Question 11

Table 2.5
  
-Refer to the table above. What happened to the real value of the minimum wage between 1974 and 2011?

Accepted Answer

A)  It remained the same. 
B)  It increased. 
C)  It decreased. 
D)  It could not be determined from the given information. 
A)  It remained the same. 
B)  It increased. 
C)  It decreased. 
D)  It could not be determined from the given information.

Question 12

-Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 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 per hour be?

Accepted Answer

A)  $16 
B)  $24 
C)  $32 
D)  $48 
A)  $16 
B)  $24 
C)  $32 
D)  $48

Question 13

Recall the Application about Jasper Johns and house painting to answer the following question(s). In this Application, it is assumed that Johns can earn $5,000 per day by painting works of art, and therefore should hire a house painter who charges $150 per day, and takes 10 days, to paint his house.
-Based on the Application, Jasper Johns' daily earnings are 33.33 times more than the house painter's daily earnings. If Jasper Johns' earnings per day were only twice as much as the house painter's earnings, what should he do?

Accepted Answer

A)  He should still hire the house painter to paint his house. 
B)  He should paint his house himself. 
C)  He should hire a less productive house painter. 
D)  He should remain indifferent as to who paints the house, for the difference in daily earnings would now be much less significant. 
A)  He should still hire the house painter to paint his house. 
B)  He should paint his house himself. 
C)  He should hire a less productive house painter. 
D)  He should remain indifferent as to who paints the house, for the difference in daily earnings would now be much less significant.

Question 14

According to the possible trade-off example between warships and drinking water in the text, the policy question that should be considered in Malaysia is

Accepted Answer

A)  do the opportunity costs of the warships exceed their nominal costs? 
B)  do the nominal costs of the warships exceed their real costs? 
C)  do the benefits of the warships exceed their opportunity costs? 
D)  do the real costs of the warships exceed their nominal costs? 
A)  do the opportunity costs of the warships exceed their nominal costs? 
B)  do the nominal costs of the warships exceed their real costs? 
C)  do the benefits of the warships exceed their opportunity costs? 
D)  do the real costs of the warships exceed their nominal costs?

Question 15

Opportunity cost is the difference between the nominal and real cost of some action.

Accepted Answer

A) True 
 B)False

Question 16

Suppose your bank pays you 4 percent interest per year on your savings account, so that $1,000 grows to $1,040 over a one-year period. If prices increase by 1 percent per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year?

Accepted Answer

A)  $0 
B)  $10 
C)  $30 
D)  $50 
A)  $0 
B)  $10 
C)  $30 
D)  $50

Question 17

Table 2.1
  
-Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. As they groom more dogs, the opportunity cost of bathing additional dogs

Accepted Answer

A)  falls. 
B)  rises. 
C)  remains constant. 
D)  depends on the prices being charged. 
A)  falls. 
B)  rises. 
C)  remains constant. 
D)  depends on the prices being charged.

Question 18

When applying the marginal principle, you should pick the level at which the activity's marginal benefit is less than its marginal cost.

Accepted Answer

A) True 
 B)False

Question 19

The notion of opportunity cost allows the measurement of tradeoffs.

Accepted Answer

A) True 
 B)False

Question 20

What matters to people is the face value of money or income.

Accepted Answer

A) True 
 B)False

Points outside the production possibilities curve represent combinations of products that are

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application. Fertilizer and Corn Yield -Refer to the table above. After applying the second bag of fertilizer, the farmer experienced

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application. Fertilizer and Corn Yield -Explain the concept of diminishing returns.

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

Table 2.4 -Refer to Table 2.4. Increasing the tanks of fertilizer from 4 to 5 will

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s). -Saving time by driving faster is an example of a of driving faster. Increasing the severity of injuries from a potential accident due to driving faster is a(n) of driving faster.

The opportunity cost of something is the nominal price paid for the product.

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s). -The use of seat belts and other automobile safety features making bicycling more hazardous can be explained by the economic concept known as

-Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 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?

Table 2.5 -Refer to the table above. What happened to the real value of the minimum wage between 1974 and 2011?

-Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 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 per hour be?

According to the possible trade-off example between warships and drinking water in the text, the policy question that should be considered in Malaysia is

Opportunity cost is the difference between the nominal and real cost of some action.

Suppose your bank pays you 4 percent interest per year on your savings account, so that $1,000 grows to $1,040 over a one-year period. If prices increase by 1 percent per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year?

Table 2.1 -Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. As they groom more dogs, the opportunity cost of bathing additional dogs

When applying the marginal principle, you should pick the level at which the activity's marginal benefit is less than its marginal cost.

The notion of opportunity cost allows the measurement of tradeoffs.

What matters to people is the face value of money or income.

Introduction: What Is Economics?

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's 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

Points outside the production possibilities curve represent combinations of products that are

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application. Fertilizer and Corn Yield -Refer to the table above. After applying the second bag of fertilizer, the farmer experienced

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application. Fertilizer and Corn Yield -Explain the concept of diminishing returns.

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

Table 2.4 -Refer to Table 2.4. Increasing the tanks of fertilizer from 4 to 5 will

The opportunity cost of something is the nominal price paid for the product.

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s). -The use of seat belts and other automobile safety features making bicycling more hazardous can be explained by the economic concept known as

-Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 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?

Table 2.5 -Refer to the table above. What happened to the real value of the minimum wage between 1974 and 2011?

-Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 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 per hour be?

According to the possible trade-off example between warships and drinking water in the text, the policy question that should be considered in Malaysia is

Opportunity cost is the difference between the nominal and real cost of some action.

Suppose your bank pays you 4 percent interest per year on your savings account, so that $1,000 grows to $1,040 over a one-year period. If prices increase by 1 percent per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year?

Table 2.1 -Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. As they groom more dogs, the opportunity cost of bathing additional dogs

When applying the marginal principle, you should pick the level at which the activity's marginal benefit is less than its marginal cost.

The notion of opportunity cost allows the measurement of tradeoffs.

What matters to people is the face value of money or income.

Introduction: What Is Economics?

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's 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