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Exam 2: The Key Principles of Economics

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Question 61

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Mark quit his job as a salesman where he made $43,000 per year to start his own t-shirt making business.His business expenses are $6,000 per year on rent,$12,000 per year on supplies,and $4,000 per year on part-time help.As for his personal expenses,his apartment costs him $4,800 per year and his personal bills are an extra $1,200 per year.What is Mark's opportunity cost of running the business?

A) $43,000
B) $57,000
C) $65,000
D) $71,000

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Question 62

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Increase the level of an activity if its marginal benefit exceeds its marginal cost; reduce the level of an activity if its marginal cost exceeds its marginal benefit.This is known as the ________.

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Question 63

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

According to the marginal principle,a rational individual should undertake an economic activity as long as the

Figure 2.4 -Joe runs a business and needs to decide how many hours to stay open.Figure 2.4 illustrates his marginal benefit of staying open for each additional hour.Suppose that Joe's marginal cost of staying open per hour is $24.How many hours should Joe stay open?

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) . -The Application shows that high inflation results in fewer years to pay back student loans because

Suppose that your tuition to attend college is $5,000 per year and you spend $5,000 per year on room and board.If you were working full time,you could earn $22,000 per year.What is your opportunity cost of attending college?

Suppose your bank pays you 5% interest per year on your savings account while prices increase by 3% per year over that time.Approximately how much nominal value do you gain by keeping $100 in the bank for a year?

Table 2.2 -Julianne runs a business 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 Julianne's marginal benefit of staying open per hour is $24.If she is following the marginal principle,how many hours should Julianne stay open?

Figure 2.4 -Joe runs a business and needs to decide how many hours to stay open.Figure 2.4 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 be?

The weekly income earned in 2015 could buy ________ standard baskets of goods and services.

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 -Recall the Application.The table shows the resulting crop yields as bags of applied fertilizer increased.These results show that as more bags of fertilizer were added,holding all other inputs constant,output

As more and more of a variable input is combined with some fixed inputs,additions to the total output decline.

Pat claims to save a great deal of money on groceries by traveling to various supermarkets to make her purchases at their advertised sale prices.She might visit as many as five different stores in one day in order to complete her weekly shopping.Her savings are not as great as she may think they are if she does not consider the

If the nominal minimum wage is unchanged while prices fall,then the real minimum wage

Figure 2.4 -Joe runs a business and needs to decide how many hours to stay open.Figure 2.4 illustrates his marginal benefit of staying open for each additional hour.Suppose that we observe Joe staying open 3 hours per day.If he is following the marginal principle,what must his marginal cost be?

Table 2.3 -Refer to Table 2.3.The marginal product of the 3rd worker is

If a consumer can buy four DVDs for $44 and five DVDs for $50,then the marginal cost of the fifth DVD is

When you have a job and your employer compensates you for your time with money,resulting in both of you being better off,it is an example of a voluntary exchange.

Table 2.3 -Refer to Table 2.3.The marginal product of the 1st worker is