ECON 251

The _____ benefit you get from buying one additional item is called its _____ benefit.

Additional, marginal

You can use willingness to pay to convert:

non-financial costs or benefits into their monetary equivalents.

Time spent is not a

opportunity cost

Moving along your production possibility frontier reveals your:

opportunity costs

When graphing demand curves, the quantity demanded goes on the horizontal axis, and _____ goes on the vertical axis.

price

_____ are goods that replace each other. Your demand for a good will increase if the price of the other good rises.

substitute goods

When you confront a problem, which of the four economic principles should you consider second?

the cost-benefit principle

To forecast the total quantity demanded, simply locate the price on the _____ and then look straight across until you hit the demand curve and then look straight down to the _____ for your answer.

vertical axis; quantity

Which of these best explains why there is no decision that does not have associated costs?

Every choice you make causes you to give up doing something else

Matthew has been diagnosed with cancer and doctors estimate that he has roughly 5 months to live. From an economic standpoint, which best explains why Matthew might be more likely than a healthy person to take a risky experimental drug?

His opportunity cost is lower than that of healthy people.

How do you know when you have broken a decision into its smallest components?

There will only be either/or choices left

Roshan is unsure about whether she should work more hours, so she gradually increases the hours that she works each week. When should she stop working more hours?

When an hour of her time is more valuable to her than her hourly pay

According to the cost-benefit principle, under what conditions should a business owner hire an additional worker?

When marginal benefit is greater than or equal to marginal cost

___ is a shift of the demand curve to the right, and _____ is a shift of the demand curve to the left.

an increase in demand; a decrease in demand

When individuals have broken a decision into only either/or choices, which two economic principles should they apply?

cost benefit and opportunity cost principle

Which of these principles, when followed correctly, causes people to avoid making choices that reduce their economic surplus?

cost-benefit principle

When a consumer is deciding how many cups of coffee to buy, the marginal benefit he should consider is _____ and the marginal cost he should consider is _____.

his willingness to pay for the next cup of coffee; the price of a cup of coffee

Which one of these questions can be simplified by applying the marginal principle?

how many workers should I hire?

You are trying to decide if you should buy a warmer coat, but realize that the answer to this question will depend on whether you are taking a trip to Canada next month. Which economic principle is taken into account?

interdependence principle

What happens to the production possibility frontier when a technique is discovered that allows more outputs to be produced with the same amount of inputs?

it expands outward

___ is a graph plotting the total quantity of an item demanded by the entire market, at each price.

market demand curve

Your willingness to pay for a pair of jeans is $50. According to the cost-benefit principle, when should you avoid buying a pair of jeans and instead opt to keep your money?

when the price of jeans exceeds $50