Exam 2: The Key Principles of Economics

The government uses the buying power of wages in reporting changes in "nominal wages" in the economy.

According to the principle of diminishing returns, if all factors of production but one are held constant and if that one factor is doubled, then eventually output will most likely

Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s). -Weighing the benefits and costs of the different speeds at which to sail an ocean cargo ship addresses the economic concept known as

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

The opportunity cost of something is the nominal price paid for the product.

The principle that the cost of something is equal to what is sacrificed to get it is known as the

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 bathing additional dogs

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 $40,000 in the first year and all prices triple in the next 10 years, what will your nominal annual salary be in 10 years?

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 we observe Krystal staying open 4 hours per day. If she is following the marginal principle, what must her marginal benefit be?

When applying the marginal principle, you should pick the level at which the activity's marginal benefit is less than its marginal cost.

What is a marginal benefit?

Steven lives in a big city where there is a shortage of parking. He has a parking spot in his driveway where he parks his car. Which of the following statements is most CORRECT?

If your salary increases at a lower rate than prices are increasing, what would happen to your buying power?

Saving time by driving faster is an example of a ________ of driving faster. Increasing the severity of injuries from a potential accident due to driving faster is a(n) ________ of driving faster.

Explain the real-nominal principle.

The opportunity cost of something is the gain you receive as a result of your sacrifice.

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 we observe Krystal staying open 2 hours per day. If she is following the marginal principle, what must her marginal benefit be?

Figure 2.1 -Refer to Figure 2.1. If you choose to produce only agricultural products, what is the maximum quantity you can produce per year?

You rent a DVD of The Dark Knight Rises. The rental is for seven days and you watch the movie on the first day. You tell a friend about the film and your friend asks to come over and watch the movie with you before it is due back. What is your opportunity cost if you decide to watch the movie a second time instead of going to a football game?

In order to get his bachelor's degree, Timothy gave up an offer for a full time job as a bartender. Therefore, Timothy incurred an opportunity cost.