Question 1

In a market economy, we know that a resource has become scarcer when

Accepted Answer

A)   its price rises relative to other prices.
B)   it is non-renewable and some of it is used.
C)   people search for substitutes.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 2

In the production function Y = AFL,K,H,N), Y represents the quantity of output; L represents the quantity of labor; K represents the quantity of physical capital; and N represents the quantity of natural resources. What does H represent?

Accepted Answer

H represen...

Question 3

Japan is

Accepted Answer

A)   an advanced economy, and over the past century its rate of economic growth has been higher than that of the United States.
B)   an advanced economy, and over the past century its rate of economic growth has been lower than that of the United States.
C)   a middle-income country, and over the past century its rate of economic growth has been higher than that of the United States.
D)   a middle-income country, and over the past century its rate of economic growth has been lower than that of the United States.E) B) and D)
F) B) and C)

Question 4

Consider three imaginary countries. In Aire, saving amounts to $4,000 and consumption amounts to $12,000; in Bovina, saving amounts to $3,000 and consumption amounts to $24,000; and in Cartar, saving amounts to $10,000 and consumption amounts to $50,000. The saving rate is

Accepted Answer

A)   higher in Aire than in Cartar, and it is higher in Cartar than in Bovina.
B)   higher in Cartar than in Aire, and it is higher in Aire than in Bovina.
C)   higher in Cartar than in Bovina, and it is the same in Bovina and Aire.
D)   higher in Aire than in Bovina, and it is the same in Aire and Cartar.E) B) and C)
F) B) and D)

Question 5

What term do we use to refer to the understanding of the best ways to produce goods and services?

Accepted Answer

The term i...

Question 6

A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are

Accepted Answer

A)   proprietary and common knowledge.
B)   common, but not proprietary, knowledge.
C)   proprietary, but not common, knowledge.
D)   neither proprietary nor common knowledge.E) A) and B)
F) B) and C)

Question 7

A country's standard of living depends on its ability to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 8

Educational attainment tends to be

Accepted Answer

A)   low in countries with high population growth.
B)   low in countries with low population growth.
C)   high in countries with high population growth.
D)   None of the above are true.E) B) and D)
F) B) and C)

Question 9

In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500. Maconia had 5% growth in real GDP per person. In 2012 it had a population of 8,400. To the nearest dollar what was real GDP in Maconia in 2012?

Accepted Answer

A)   216,815
B)   221,025
C)   226,416
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 10

Other things the same, which of the following would increase productivity?

Accepted Answer

A)   an increase in either human or physical capital
B)   an increase in human capital but not an increase in physical capital
C)   an increase in physical capital but not an increase in human capital
D)   neither an increase in human capital nor an increase in physical capitalE) A) and B)
F) A) and C)

Question 11

Assuming diminishing returns,

Accepted Answer

A)   the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones.
B)   the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones.
C)   the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones.
D)   the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.E) B) and D)
F) None of the above

Question 12

An increase in a country's saving rate permanently raises its productivity.

Accepted Answer

A) True 
 B)False

Question 13

In what sense is capital accumulation costly to a society?

Accepted Answer

Capital accumulation requires ...

Question 14

If the price of a good has risen over time,

Accepted Answer

A)   it must have become more scarce.
B)   it must have become less scarce.
C)   it has become more scarce only if the price adjusted for inflation has risen.
D)   it has become less scarce only if the price adjusted for inflation has risen.E) A) and B)
F) C) and D)

Question 15

What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.

Accepted Answer

A production function is a mathematical ...

Question 16

What particularly important role do courts play in a market economy?

Accepted Answer

Courts enforce prope...

Question 17

Which of the following is an example of human capital?

Accepted Answer

A)   the comfortable chair in your dorm room where you read economics texts
B)   the amount you get paid each week to work at the library
C)   the things you have learned this semester
D)   any capital goods that require a human to be present to operateE) B) and C)
F) A) and C)

Question 18

All else equal, which of the following would tend to cause real GDP per person to rise?

Accepted Answer

A)   a change from outward-oriented policies to inward-oriented policies
B)   an increase in investment in human capital
C)   a weakening of property rights
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 19

The catch-up effect refers to the idea that

Accepted Answer

A)   saving will always catch-up with investment spending.
B)   it is easier for a country to grow fast and so catch-up if it starts out relatively poor.
C)   population eventually catches-up with increased output.
D)   if investment spending is low, increased saving will help investment to "catch-up."E) A) and B)
F) None of the above

Question 20

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

Accepted Answer

A)   1/3 laptop per hour
B)   3 hours per laptop
C)   1200 laptops
D)   400 laptopsE) All of the above
F) A) and C)

Exam 7: Production and Growth

What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.

Correct AnswerverifiedA production function is a mathematical ...View AnswerShow Answer

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

Correct AnswerverifiedShow Answer

The catch-up effect refers to the idea that

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What particularly important role do courts play in a market economy?

Correct AnswerverifiedCourts enforce prope...View AnswerShow Answer

Japan is

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What term do we use to refer to the understanding of the best ways to produce goods and services?

Correct AnswerverifiedThe term i...View AnswerShow Answer

Consider three imaginary countries. In Aire, saving amounts to $4,000 and consumption amounts to $12,000; in Bovina, saving amounts to $3,000 and consumption amounts to $24,000; and in Cartar, saving amounts to $10,000 and consumption amounts to $50,000. The saving rate is

Correct AnswerverifiedShow Answer

An increase in a country's saving rate permanently raises its productivity.

Correct AnswerverifiedShow Answer

In a market economy, we know that a resource has become scarcer when

Correct AnswerverifiedShow Answer

Other things the same, which of the following would increase productivity?

Correct AnswerverifiedShow Answer

All else equal, which of the following would tend to cause real GDP per person to rise?

Correct AnswerverifiedShow Answer

A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are

Correct AnswerverifiedShow Answer

Assuming diminishing returns,

Correct AnswerverifiedShow Answer

Which of the following is an example of human capital?

Correct AnswerverifiedShow Answer

Educational attainment tends to be

Correct AnswerverifiedShow Answer

If the price of a good has risen over time,

Correct AnswerverifiedShow Answer

In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500. Maconia had 5% growth in real GDP per person. In 2012 it had a population of 8,400. To the nearest dollar what was real GDP in Maconia in 2012?

Correct AnswerverifiedShow Answer

A country's standard of living depends on its ability to produce goods and services.

Correct AnswerverifiedShow Answer

In the production function Y = AFL,K,H,N), Y represents the quantity of output; L represents the quantity of labor; K represents the quantity of physical capital; and N represents the quantity of natural resources. What does H represent?

Correct AnswerverifiedH represen...View AnswerShow Answer

In what sense is capital accumulation costly to a society?

Correct AnswerverifiedCapital accumulation requires ...View AnswerShow Answer

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A production function is a mathematical ...
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Courts enforce prope...
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The term i...
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H represen...
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Capital accumulation requires ...
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