Exam 2: The Key Principles of Economics

Figure 2.1 -Referring to Figure 2.1,if you increase the production of agricultural products,what other area is affected?

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 statements is most correct?

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s). -Based on the Application,the marginal benefit of sailing a ship faster is

The marginal principle states that "we should increase the level of an activity as long as

The opportunity cost of getting a Master's degree in engineering equals the tuition plus the cost of books.

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

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

The additional cost resulting from a one unit increase in the production of a good is known as the ________.

Suppose that your tuition to attend college is $10,000 per year and you spend $4,000 per year on room and board.If you were working full time instead of attending college,you could earn $20,000 per year.What is your opportunity cost of attending college for one year?

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

You borrow money to buy a house in 2012 at a variable interest rate of 6.5%.Your interest rate is always 2% more than the rate of inflation.By 2016,the inflation rate has risen to 8.5%.Considering only your mortgage,is inflation good news or bad news for you?

When prices rise,increases in real income are greater than increases in nominal income.

The face value of money or income is called its ________ value.

Trade-offs involve an exchange of one thing for another because resources are limited and can be used in different ways.

The opportunity cost of going to a particular college is not the same for everyone.

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. -If Rory McIlroy had to pay his gardener $20 per hour instead of $10 per hour,what should he do?

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

Table 2.4 -The firm depicted in Table 2.4 is likely to face diminishing returns because

Recall the Application about running a lawn-cutting business using solar-powered equipment to answer the following question(s). -Using figures from the Application,the opportunity cost of running your business

Firms that make their customers better off get more repeat business and make earn more profits.