Exam 2: The Key Principles of Economics

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

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

When product prices increase slower than nominal wages increase, the real value of wages decreases.

You are running a small yard maintenance business for the summer. What do you expect to happen to the number of yards you can maintain in a day as you add workers if you don't purchase more capital equipment (like mowers and leaf blowers)?

Table 2.5 -Comparing the minimum wages between 1974 and 2011 addresses the economic concept of

Sailing an ocean cargo ship slower to save on the expense of fuel as opposed to sailing it faster to save time and therefore allow it to make more deliveries makes sense if the ________ of sailing slower is less than the ________ of sailing slower.

Table 2.2 -Krystal runs a nail salon 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 Krystal's marginal benefit of staying open per hour is $18. If she is following the marginal principle, how many hours should Krystal stay open?

The value of money or income in terms of the quantity of goods the money can buy is called its

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

The extra benefit resulting from a small increase in an activity is called the

A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50 percent. Which of the following is the most likely explanation of this finding?

What is the real value of money?

-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 5 hours per day. If he is following the marginal principle, what must his marginal cost per hour be?

Suppose that your tuition to attend college is $14,000 per year and you spend $5,000 per year on room and board. If you were working full time, you could earn $26,000 per year. What is your opportunity cost of attending college?

Table 2.5 -Refer to the table above. What happened to the real value of the minimum wage between 1974 and 2011?

The real value of money

Suppose your bank pays you 4 percent interest per year on your savings account, so that $1,000 grows to $1,040 over a one-year period. If prices increase by 1 percent per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year?

If you remove resources from factory production, the quantity of factory goods will

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). -In considering the costs involved for student loans that must be repaid in ten years, this Application is addressing the economic concept of

Recall the Application about the use of fertilizer and its impact on crop yields to answer the following question(s). The table is taken from this Application. Fertilizer and Corn Yield -Based on the data in the table, this Application addresses the economic concept of