Exam 2: The Key Principles of Economics

If an economy is represented by a point along its production possibilities curve

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

Jacinda quit her job as a blackjack dealer where she made $42,000 per year to start her own florist business. Her business expenses are $14,000 per year on rent, $21,000 per year on supplies, and $9,000 per year on part time help. As for her personal expenses, her apartment costs her $12,000 per year and her personal bills are an extra $6,000 per year. What is Jacinda's opportunity cost of running the business?

The use of seat belts and other automobile safety features making bicycling more hazardous can be explained by the economic concept known as

Explain the concept of diminishing returns.

Figure 2.1 -The production possibilities curve in Figure 2.1 illustrates the notion of

What do economists mean when they say that there is no such thing as a free lunch?

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

Table 2.5 -Refer to the table above. The nominal value of the minimum wage in 2011 was

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

Table 2.1 -Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. As they groom more dogs, the opportunity cost of grooming additional dogs

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

What is a marginal cost?

Table 2.3 -Refer to Table 2.3. Increasing the number of workers from 2 to 3 will increase output per day by

The principle of voluntary exchange is the concept that a voluntary exchange between two people makes both people better off.

The current income you would sacrifice to start your own lawn-cutting business is part of the

The real-nominal principle states that

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

You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By 2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0 percent in 2009. Considering only your mortgage, is inflation good news or bad news for you?

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