Exam 2: The Key Principles of Economics

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 -According to the principle of diminishing returns, an additional worker decreases total output.

Table 2.1 -Kaitlyn and Larissa have formed a dog bathing and grooming business business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. The opportunity cost of grooming the first dog in a day is bathing ________ dog(s).

When you have a job and your employer compensates you for your time with money, resulting in both of you being better off, it is an example of a voluntary exchange.

How would an increase in prices in retail stores change the real value of the money you earn as wages?

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. The farmer increased his total production of corn by 9 bushels per acre after applying

Table 2.2 -Krystal runs a nail salon 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 Krystal's marginal benefit of staying open per hour is $18. If she is following the marginal principle, how many hours should Krystal stay open?

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

Suppose that your tuition to attend college is $24,000 per year and you spend $8,000 per year on room and board. If you were working full time, you could earn $30,000 per year. What is your opportunity cost of attending college for one year?

Recall the Application about the impact inflation has on your potential future salary and the repayment of student loans to answer the following question(s). -According to this Application, if you earn a salary of $40,000 in the first year and all prices triple in the next 10 years, what will your nominal annual salary be in 10 years?

Considering how a change in one variable affects the value of another variable is called

When referring to "marginal" changes, the economic focus is on

Consider a firm that is trying to determine how many hours to remain open in a day. How would the firm make this decision?

Table 2.5 -Refer to the table above. By what percentage did the federal minimum wage increase from 1974 to 2011?

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. The farmer began to experience diminishing returns after applying how many bags of fertilizer?

You are running a small yard maintenance business for the summer. What do you expect to happen to the number of yards you can maintain in a day as you add workers if you don't purchase more capital equipment (like mowers and leaf blowers)?

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 -Based on the data in the table, this Application addresses the economic concept of

The government uses the buying power of wages rather than face value or nominal value in reporting changes in "real wages" in the economy.

Suppose that you lend $5,000 to a friend who pays you back $5,400 the next year. Suppose that prices that year rose by six percent and the real rate of return in the stock market was five percent. 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?

When deciding whether to engage in an activity or how much to do, people should follow

If product prices decrease more than nominal wages decrease, the real value of wages will increase.