Exam 2: The Key Principles of Economics

Spending money on a fixed budget is an example of

Is marginal cost the additional cost resulting from a large or small increase in some activity?

An increase in the wages received by lawyers in general will result in an increase in the opportunity cost of law school.

Suppose prices increase by 3% per year.What nominal percentage return on your savings account would you require to get a 3% real return?

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 third house in a day is

The principle that what matters to people is the real value or purchasing power of money is the

The principle that "as one input increases while the other inputs are held fixed,output beyond some point will exhibit increases at a decreasing rate" is known as the

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

Basically,the marginal principle teaches us to evaluate the factors involved in taking an action to decide if the action it is worth the effort.

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

From 1974 to 2015,as the nominal minimum wage rose from $2 to $7.25,the real value of the minimum wage fell.

If the price level falls faster than the wage rate,then the real wage decreases.

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 as more highways are built,the opportunity cost of building each additional highway is

Suppose it costs a firm $200 million to produce and promote a sequel.If the firm follows the marginal principle and decides not to produce the movie,which of the following must be true?

Suppose your bank pays you 6% interest per year on your savings account,so that $100 grows to $106 over a one-year period.If prices increase by 3% per year over that time,approximately how much real value do you gain by keeping $100 in the bank for a year?

The only way individuals can cope with scarcity is by being self-sufficient.

Figure 2.1 -On the production possibilities curve in Figure 2.1,as agricultural production increases by 200 tons per year from 200 tons to 400 tons and then to 600 tons,the opportunity cost in terms of tons of manufactured goods

Figure 2.1 -On the production possibilities curve in Figure 2.1,the opportunity costs of increasing agricultural production from 400 tons to 600 tons is ________ tons of manufactured products.

Opportunity cost is the difference between the benefit and cost of some action.

Table 2.4 -Refer to Table 2.4.The marginal product of the 2nd tank of fertilizer is