Exam 2: The Key Principles of Economics

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

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

An unemployed individual decides to spend the day fishing.The opportunity cost of fishing is equal to

Suppose that you lend $1,000 to a friend and she pays you back one year later.What is the opportunity cost of lending the money?

Economists argue that individuals should continue to consume until total benefit equals total cost.

Recall the Application about running a lawn-cutting business using solar-powered equipment to answer the following question(s). -Using figures from the Application,$5,000 (which is the market value of all your equipment)is the

What is the opportunity cost of investing $10,000 of your own money in a business you wish to start?

A "market" is an arrangement that enables people to exchange goods and services.

When two people engage in voluntary trade,

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

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 $3.If she is following the marginal principle,how many hours should Julianne stay open?

Figure 2.3 -In Figure 2.3,point A

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

Suppose prices increase by 4% per year.What nominal percentage return on your savings account would you require to get a 1% real return?

When does voluntary exchange take place?

If a company's total costs per day increase from $500 to $600 by adding another worker,but its additional benefits are $150,it is sensible to add that additional worker.

The economic reason why you voluntarily pay tuition to get into the university/college that you are in right now is because

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,a ship captain will decide to sail a ship slower if

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 fourth new highway built in a year is ________ people provided with medical care.

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