Question 1

Physical capital is:

Accepted Answer

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

Question 2

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

Accepted Answer

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

Question 3

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

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 4

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.

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 5

Getting a master's degree is an example of investing in:

Accepted Answer

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

Question 6

Human capital is:

Accepted Answer

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

Question 7

The principle that if the amount of labor and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of:

Accepted Answer

This is the definition of the "principle of diminishing returns" as applied to addition of capital stock.

Question 8

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.

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 9

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

Accepted Answer

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

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.

Accepted Answer

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

Question 11

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

Accepted Answer

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

Question 12

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:

Accepted Answer

This is the definition of the "principle of diminishing returns" as applied to addition of capital stock.

Question 13

Increasing the capital available to the workforce, holding other factors constant, tends to ______ total output while ______ average labor productivity.

Accepted Answer

Increasing the capital available to workers increases their average labor productivity and therefore, output.

Question 14

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:

Accepted Answer

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

Question 15

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.

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 16

Long-lived goods used to produce other goods and services are called:

Accepted Answer

Physical capital is the factories, machinery, and other long-lived goods used to produce other goods and services.

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

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

Question 20

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.

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.

Quiz 6: Economic Growth, Productivity, and Living Standards

Physical capital is:

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

Getting a master's degree is an example of investing in:

Human capital is:

The principle that if the amount of labor and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of:

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.

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

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:

Increasing the capital available to the workforce, holding other factors constant, tends to total output while average labor productivity.

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:

Long-lived goods used to produce other goods and services are called:

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

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

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