Question 1

Suppose that your tuition to attend college is $10,000 per year and you spend $4,000 per year on room and board. If you were working full time instead of attending college, you could earn $20,000 per year. What is your opportunity cost of attending college for one year?

Accepted Answer

A)   $30,000
B)   $34,000
C)   $24,000
D)   $14,000

Question 2

-Refer to Table 2.4. The marginal product of the 3rd tank of fertilizer is:

Accepted Answer

A)   29.33 truckloads of fruit.
B)   1.67 truckloads of fruit.
C)   5 truckloads of fruit.
D)   20 truckloads of fruit.

Question 3

Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions:
-According to the application, if the weekly income from 1974 to 2007 increased from $80 to $234, but the number of standard baskets of goods that the weekly income decreased from 1.70 to 1.16 in 2007, then we can conclude that:

Accepted Answer

A)   prices decreased faster than the wage increase between 1974 and 2007.
B)   prices increased faster than the wage increase between 1974 and 2007.
C)   prices decreased slower than the wage increase between 1974 and 2007.
D)   prices increased slower than the wage increase between 1974 and 2007.

Question 4

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

Accepted Answer

A)   increased farm produce production.
B)   opportunity cost.
C)   increased factory goods production.
D)   diminishing resources.

Question 5

Figure 2.1
-On the production possibilities curve in Figure 2.1 as agricultural production increases by 200 tons per year from 200 tons to 400 tons and then to 600 tons, the opportunity cost in terms of tons of manufacturing goods:

Accepted Answer

A)   rises.
B)   becomes negative.
C)   falls.
D)   is constant.

Question 6

The opportunity cost of going to college:

Accepted Answer

A)   includes wages you lose by going to school instead of working.
B)   is equal to the cost of tuition, room and board, and other expenses.
C)   is zero if your parents pay your tuition.
D)   is the same for all students at a particular school who pay full tuition.

Question 7

The opportunity cost of something is:

Accepted Answer

A)   the cost of the labor used to produce it.
B)   the price charged for it.
C)   the search cost required to find it.
D)   what you sacrifice to get it.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The marginal output of labor is the amount of output that can be produced if one more unit of labor is added.

Accepted Answer

A) True 
 B)False

Question 10

Nancy and Melissa both have broken light fixtures in their living rooms. Nancy opts to hire an electrician, while Melissa spends two hours replacing the fixture herself. Which of the following is a possible explanation of this behavior?

Accepted Answer

A)   The opportunity cost of Nancy's time is higher than her cost to hire an electrician.
B)   Nancy dislikes electrical work more than Melissa.
C)   Melissa is better at doing electrical work than Nancy.
D)   All of the above are possible explanations of this behavior.

Question 11

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

Accepted Answer

A)   reality principle.
B)   principle of opportunity cost.
C)   principle of diminishing returns.
D)   marginal principle.

Question 12

What is the opportunity cost of investing $10,000 of your own money in a business you wish to start?

Accepted Answer

The opportunity cost of your $...

Question 13

Suppose prices increase by 3% per year. What nominal percentage return on your savings account would you require to get a 3% real return?

Accepted Answer

A)   3%
B)   9%
C)   8%
D)   6%

Question 14

If the price level falls faster than the wage rate, then the real wage decreases.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)   marginal benefit equals marginal cost.
B)   total benefit equals total cost.
C)   marginal benefit exceeds marginal cost.
D)   marginal benefit is less than marginal cost.

Exam 2: The Key Principles of Economics

The opportunity cost of going to college:

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

Correct Answer
verified

The marginal output of labor is the amount of output that can be produced if one more unit of labor is added.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Suppose that your tuition to attend college is $10,000 per year and you spend $4,000 per year on room and board. If you were working full time instead of attending college, you could earn $20,000 per year. What is your opportunity cost of attending college for one year?

Correct Answer
verified

If the price level falls faster than the wage rate, then the real wage decreases.

Correct Answer
verified

The opportunity cost of something is:

Correct Answer
verified

Figure 2.1 -On the production possibilities curve in Figure 2.1 as agricultural production increases by 200 tons per year from 200 tons to 400 tons and then to 600 tons, the opportunity cost in terms of tons of manufacturing goods:

Correct Answer
verified

Nancy and Melissa both have broken light fixtures in their living rooms. Nancy opts to hire an electrician, while Melissa spends two hours replacing the fixture herself. Which of the following is a possible explanation of this behavior?

Correct Answer
verified

Suppose prices increase by 3% per year. What nominal percentage return on your savings account would you require to get a 3% real return?

Correct Answer
verified

What is the opportunity cost of investing $10,000 of your own money in a business you wish to start?

Correct Answer
verified
The opportunity cost of your $...
View Answer

-Refer to Table 2.4. The marginal product of the 3rd tank of fertilizer is:

Correct Answer
verified

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

Correct Answer
verified

Exam 2: The Key Principles of Economics

The opportunity cost of going to college:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The marginal output of labor is the amount of output that can be produced if one more unit of labor is added.

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that your tuition to attend college is $10,000 per year and you spend $4,000 per year on room and board. If you were working full time instead of attending college, you could earn $20,000 per year. What is your opportunity cost of attending college for one year?

Correct AnswerverifiedShow Answer

If the price level falls faster than the wage rate, then the real wage decreases.

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The opportunity cost of something is:

Correct AnswerverifiedShow Answer

Figure 2.1 -On the production possibilities curve in Figure 2.1 as agricultural production increases by 200 tons per year from 200 tons to 400 tons and then to 600 tons, the opportunity cost in terms of tons of manufacturing goods:

Correct AnswerverifiedShow Answer

Nancy and Melissa both have broken light fixtures in their living rooms. Nancy opts to hire an electrician, while Melissa spends two hours replacing the fixture herself. Which of the following is a possible explanation of this behavior?

Correct AnswerverifiedShow Answer

Suppose prices increase by 3% per year. What nominal percentage return on your savings account would you require to get a 3% real return?

Correct AnswerverifiedShow Answer

What is the opportunity cost of investing $10,000 of your own money in a business you wish to start?

Correct AnswerverifiedThe opportunity cost of your $...View AnswerShow Answer

-Refer to Table 2.4. The marginal product of the 3rd tank of fertilizer is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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The opportunity cost of your $...
View Answer

Correct Answer
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Correct Answer
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