Question 1

What is an opportunity cost?

Accepted Answer

An opportunity cost

Question 2

Table 2.4
-Refer to Table 2.4. What can be observed about the given resources?

Accepted Answer

A)  Land is variable but fertilizer is fixed. 
B)  Land and fertilizer are both fixed. 
C)  Land and fertilizer are both variable. 
D)  Land is fixed but fertilizer is variable. 
A)  Land is variable but fertilizer is fixed. 
B)  Land and fertilizer are both fixed. 
C)  Land and fertilizer are both variable. 
D)  Land is fixed but fertilizer is variable.

Question 3

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

Accepted Answer

A)  There is no opportunity cost because you own the house. 
B)  There is no opportunity cost unless you could set up a business in the house. 
C)  The opportunity cost is the rent you could have received from a tenant if you didn't live there. 
D)  The opportunity cost is the cost of your monthly mortgage payment plus bills. 
A)  There is no opportunity cost because you own the house. 
B)  There is no opportunity cost unless you could set up a business in the house. 
C)  The opportunity cost is the rent you could have received from a tenant if you didn't live there. 
D)  The opportunity cost is the cost of your monthly mortgage payment plus bills.

Question 4

The cost of a bachelor's degree in philosophy equals the tuition plus the cost of room and board.

Accepted Answer

A) True 
 B)False

Question 5

-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 6

What is the nominal value of money?

Accepted Answer

A)  what can be purchased with the money 
B)  discounts taken by multiple purchases 
C)  savings by shopping on specific days of the week 
D)  its actual face value 
A)  what can be purchased with the money 
B)  discounts taken by multiple purchases 
C)  savings by shopping on specific days of the week 
D)  its actual face value

Question 7

Angelina, age seven, decides to dress up like Princess Fiona for Halloween. What is the opportunity cost of her decision?

Accepted Answer

A)  the cost of the costume 
B)  the fact that she can't dress up like Dora the Explorer, her second choice 
C)  zero, because seven-year-olds don't have opportunity costs 
D)  the cost of the Lady Gaga costume which she did not want 
A)  the cost of the costume 
B)  the fact that she can't dress up like Dora the Explorer, her second choice 
C)  zero, because seven-year-olds don't have opportunity costs 
D)  the cost of the Lady Gaga costume which she did not want

Question 8

Figure 2.1
-Refer to Figure 2.1. If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year?

Accepted Answer

A)  300 tons 
B)  500 tons 
C)  600 tons 
D)  700 tons 
A)  300 tons 
B)  500 tons 
C)  600 tons 
D)  700 tons

Question 9

Is it possible for nominal wages to decrease while real wages increase?

Accepted Answer

Yes, though unlikely. This wou

Question 10

Table 2.3
-Refer to Table 2.3. The principle of diminishing returns first occurs when how many workers are hired?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 11

The sacrifices made by societies in order to engage in military spending represent

Accepted Answer

A)  the nominal costs of military spending. 
B)  the real costs of military spending. 
C)  the opportunity costs of military spending. 
D)  the excessive costs of military spending. 
A)  the nominal costs of military spending. 
B)  the real costs of military spending. 
C)  the opportunity costs of military spending. 
D)  the excessive costs of military spending.

Question 12

What is the opportunity cost of your college degree?

Accepted Answer

A quick answer would be to say that the

Question 13

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 14

Diminishing returns occurs because

Accepted Answer

A)  not enough people have jobs. 
B)  one of the inputs in the production process is fixed. 
C)  consumers don't buy enough of the products produced. 
D)  two people have not satisfied their self-interests. 
A)  not enough people have jobs. 
B)  one of the inputs in the production process is fixed. 
C)  consumers don't buy enough of the products produced. 
D)  two people have not satisfied their self-interests.

Question 15

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

Accepted Answer

A)  the purchasing power of money has increased. 
B)  prices have not changed. 
C)  prices have risen. 
D)  prices have fallen. 
A)  the purchasing power of money has increased. 
B)  prices have not changed. 
C)  prices have risen. 
D)  prices have fallen.

Question 16

The principle of diminishing returns implies that as one input increases while the other inputs are held fixed, output

Accepted Answer

A)  increases at an increasing rate. 
B)  increases at a decreasing rate. 
C)  decreases at a decreasing rate. 
D)  decreases at an increasing rate. 
A)  increases at an increasing rate. 
B)  increases at a decreasing rate. 
C)  decreases at a decreasing rate. 
D)  decreases at an increasing rate.

Question 17

People acting in their own self interest is the basis of the

Accepted Answer

A)  principle of supply and demand. 
B)  principle of voluntary exchange. 
C)  real-nominal principle. 
D)  principle of scarcity. 
A)  principle of supply and demand. 
B)  principle of voluntary exchange. 
C)  real-nominal principle. 
D)  principle of scarcity.

Question 18

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 $80,000 in the first year and all prices decrease by half in the next 5 years, what will your nominal annual salary be in 5 years?

Accepted Answer

A)  $8,000 
B)  $10,000 
C)  $20,000 
D)  $40,000 
A)  $8,000 
B)  $10,000 
C)  $20,000 
D)  $40,000

Question 19

The trade-offs made by the U.S. government to fund the war in Iraq

Accepted Answer

A)  prove that the government is spending too much on the war. 
B)  show that the government is justified in its war spending. 
C)  exceed the benefits derived from the war. 
D)  represent what was potentially sacrificed to engage in the war. 
A)  prove that the government is spending too much on the war. 
B)  show that the government is justified in its war spending. 
C)  exceed the benefits derived from the war. 
D)  represent what was potentially sacrificed to engage in the war.

Question 20

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?

Accepted Answer

The opportunity cost of that money was n

What is an opportunity cost?

Table 2.4 -Refer to Table 2.4. What can be observed about the given resources?

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

The cost of a bachelor's degree in philosophy equals the tuition plus the cost of room and board.

-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?

What is the nominal value of money?

Angelina, age seven, decides to dress up like Princess Fiona for Halloween. What is the opportunity cost of her decision?

Figure 2.1 -Refer to Figure 2.1. If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year?

Is it possible for nominal wages to decrease while real wages increase?

Table 2.3 -Refer to Table 2.3. The principle of diminishing returns first occurs when how many workers are hired?

The sacrifices made by societies in order to engage in military spending represent

What is the opportunity cost of your college degree?

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

Diminishing returns occurs because

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

The principle of diminishing returns implies that as one input increases while the other inputs are held fixed, output

People acting in their own self interest is the basis of the

The trade-offs made by the U.S. government to fund the war in Iraq

Introduction: What Is Economics

Demand, Supply, and Market Equilibrium

Elasticity: A Measure of Responsiveness

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Measuring a Nations Production and Income

Unemployment and Inflation

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters

Exam 2: The Key Principles of Economics

What is an opportunity cost?

Table 2.4 -Refer to Table 2.4. What can be observed about the given resources?

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

The cost of a bachelor's degree in philosophy equals the tuition plus the cost of room and board.

-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?

What is the nominal value of money?

Angelina, age seven, decides to dress up like Princess Fiona for Halloween. What is the opportunity cost of her decision?

Figure 2.1 -Refer to Figure 2.1. If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year?

Is it possible for nominal wages to decrease while real wages increase?

Table 2.3 -Refer to Table 2.3. The principle of diminishing returns first occurs when how many workers are hired?

The sacrifices made by societies in order to engage in military spending represent

What is the opportunity cost of your college degree?

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

Diminishing returns occurs because

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

The principle of diminishing returns implies that as one input increases while the other inputs are held fixed, output

People acting in their own self interest is the basis of the

The trade-offs made by the U.S. government to fund the war in Iraq

Introduction: What Is Economics

Demand, Supply, and Market Equilibrium

Elasticity: A Measure of Responsiveness

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Measuring a Nations Production and Income

Unemployment and Inflation

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters