Question 1

Getting a college degree is an example of investing in:
A)human capital.
B)physical capital.
C)technology.
D)research and development.

Accepted Answer

Investments to develop worker skills is "human capital investment."

Question 2

Jim and Fred are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week and each can check out 30 customers per hour by manually entering the price of each product purchased into the cash register. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Jim and Fred can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ________ customers per hour and ________ customers per hour after the new machines were installed.
A)30; 60
B)30; 120
C)60; 120
D)1,200; 2,400

Accepted Answer

The team's beginning average hourly output was 30 customers per hour. After buying the new cash registers, the team's average hourly output increased to 60 customers per hour.

Question 3

When a worker learns how to use a new business-related software program, this is an example of investing in:
A)human capital.
B)physical capital.
C)research and development
D)the stock market.

Accepted Answer

Investments to develop worker skills is "human capital investment."

Question 4

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 30 chicken breasts per hour by hand, while Tom's experience allows him to debone 60 chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain maximum average hourly productivity, ________ is assigned to use the machine and their combined average hourly productivity as a team is ________ chicken breasts
A)Mike; 65
B)Mike; 80
C)Tom; 65
D)Tom; 80

Accepted Answer

Mike is assigned to the machine because he is the least efficient producer. After getting the machine, the team debones 160 chicken breasts per hour (Mike deboned 100 and Tom deboned 60), for an average of 80 per worker.

Question 5

Human capital is:
A)the factories and machinery used by humans in the production process.
B)the talents, training, and education of workers.
C)the financial resources available to humans for investment.
D)the factories and machinery made by workers.

Accepted Answer

Human capital is the talents, training, and education of workers.

Question 6

Economists refer to the talents, training, and education of workers as:
A)human capital.
B)physical capital.
C)average labor productivity.
D)labor supply.

Accepted Answer

Human capital is the talents, training, and education of workers.

Question 7

Which of the following is an example of an investment in human capital?
A)A firm replaces manually controlled production with a computer controlled procedure.
B)A firm pays for workers to take college classes.
C)A chemical firm supports research to develop new chemicals.
D)A firm purchases new equipment for a manufacturing process.

Accepted Answer

Investments to develop worker skills is "human capital investment."

Question 8

When a firm builds a new factory, this is an example of an investment in:
A)human capital.
B)physical capital.
C)the market.
D)research and development.

Accepted Answer

When businesses invest in a new plant, equipment, and/or factories it is physical capital investment. These investments usually increase productivity.

Question 9

Fred and Barney fill egg cartons with eggs. Fred just started the job and can fill only 25 cartons an hour. Barney has significant on-the-job experience and can fill 50 cartons an hour. Both Fred and Barney work 50 hours a week. Fred's average weekly productivity is ________ cartons; Barney's average weekly productivity is ________ cartons; and as a team their average weekly productivity is ________ cartons.
A)25; 50; 75
B)25; 50; 37.5
C)1,000; 2,000; 1,500
D)1,250; 2,500; 1,875

Accepted Answer

Fred's average weekly productivity is 1,250 cartons, which is the hourly rate of 25 times 50 hours worked. The same equation applies for Barney whose weekly productivity is 2,500 (50 × 50). Team average hourly productivity is 37.5 cartons, which is the sum of each worker's hourly output divided by the number of team members or (25 + 50)/ 2. The team's average weekly productivity is 1,875 cartons per week.

Question 10

Countries with small amounts of capital per worker tend to have ________ levels of real GDP per person and ________ levels of average labor productivity.
A)high; high
B)high; low
C)low; low
D)low; average

Accepted Answer

Countries with small amounts of capital per worker suffer from low productivity; this results in low real GDP per person.

Question 11

Which of the following is an example of an investment in physical capital?
A)A firm trains workers to operate new machinery.
B)A firm pays for workers to take college classes.
C)A chemical firm employs chemists to develop new chemicals.
D)A firm purchases new equipment for a manufacturing process.

Accepted Answer

When businesses invest in a new plant, equipment, and/or factories it is physical capital investment. These investments usually increase productivity.

Question 12

Providing workers with on-the-job training will increase:
A)average labor productivity.
B)the share of the population employed.
C)the unemployment rate.
D)the labor force participation rate.

Accepted Answer

On-the-job training is a form of human capital investment. This investment usually increases average labor productivity.

Question 13

Equipment used to produce other goods and services are called:
A)financial capital.
B)human capital.
C)physical capital.
D)inventories.

Accepted Answer

Physical capital is the factories and machinery used to produce other goods and services.

Question 14

Betty and Wilma are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week. By manually entering the price of each product purchased into the cash register, Betty can check out 20 customers and Wilma can check out 30 customers per hour. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Betty and Wilma can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ________ customers per hour and ________ customers per hour after the new machines were installed.
A)25; 60
B)50; 120
C)50; 60
D)1,000; 2,400

Accepted Answer

The team's beginning average hourly output was 25 customers per hour (50/2). After buying the new cash registers, the team's average hourly output was 60 customers per hour.

Question 15

Countries with large amounts of capital per worker tend to have ________ levels of real GDP per person and ________ levels of average labor productivity.
A)high; high
B)high; low
C)low; low
D)low; average

Accepted Answer

Countries with large amounts of capital per worker benefit from high productivity; this results in high real GDP per person.

Question 16

Fred and Barney fill egg cartons with eggs. Fred just started the job and can fill only 20 cartons an hour. Barney has significant on-the-job experience and can fill 40 cartons an hour. Both Fred and Barney work 40 hours a week. Fred's average weekly productivity is ________ cartons; Barney's average weekly productivity is ________ cartons; and as a team their average weekly productivity is ________ cartons.
A)20; 40; 60
B)20; 40; 30
C)800; 2,000; 1,600
D)800; 1,600; 1,200

Accepted Answer

Fred's average weekly output is 800 cartons, which is the hourly rate of 20 times 40 hours worked. The same equation applies for Barney whose weekly productivity is 1,600 (40 × 40). Team average weekly productivity is 30 cartons, which is the sum of each worker's hourly output divided by the number of team members. The team team's average weekly productivity is 1,200 cartons per week.

Question 17

Physical capital is the:
A)factories and machinery used to produce other goods and services.
B)talents, training, and education of workers.
C)financial resources available for investment.
D)physical labor of workers.

Accepted Answer

Physical capital is the factories and machinery used to produce other goods and services.

Question 18

The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs)is based on the:
A)principle of comparative advantage.
B)principle of diminishing returns to capital.
C)scarcity principle.
D)cost-benefit principle.

Accepted Answer

The cost-benefit principle says that marginal benefits of a decision should exceed marginal costs for additional training to occur.

Question 19

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 60 chicken breasts per hour by hand, while Tom's experience allows him to debone 120 chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain maximum average hourly productivity, ________ is assigned to use the machine and their combined average hourly productivity as a team is ________ chicken breasts.
A)Mike; 80
B)Mike; 110
C)Tom; 80
D)Tom; 110

Accepted Answer

Mike is assigned to the machine because he is the least efficient producer. After getting the machine, the team debones 220 chicken breasts per hour (Mike deboned 100 and Tom deboned 120), for an average of 110 per worker.

Question 20

Workers should invest in additional human capital as long as the:
A)marginal benefit exceeds the marginal cost.
B)marginal cost exceeds the marginal benefit.
C)opportunity cost exceeds the marginal benefit.
D)opportunity cost is zero.

Accepted Answer

Investments in human capital follow the cost-benefit principle, i.e., marginal benefits should exceed marginal costs.

Quiz 19: Economic Growth, Productivity, and Living Standards

Getting a college degree is an example of investing in:

When a worker learns how to use a new business-related software program, this is an example of investing in:

Human capital is:

Economists refer to the talents, training, and education of workers as:

Which of the following is an example of an investment in human capital?

When a firm builds a new factory, this is an example of an investment in:

Countries with small amounts of capital per worker tend to have levels of real GDP per person and levels of average labor productivity.

Which of the following is an example of an investment in physical capital?

Providing workers with on-the-job training will increase:

Equipment used to produce other goods and services are called:

Countries with large amounts of capital per worker tend to have levels of real GDP per person and levels of average labor productivity.

Physical capital is the:

The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs) is based on the:

Workers should invest in additional human capital as long as the: