Question 1

In a particular production process, if the quantities of all inputs used are increased by 60 percent, then the quantity of output increases by 60 percent as well. This means that

Accepted Answer

This scenario demonstrates constant-returns-to-scale, meaning that increasing all inputs by the same proportion leads to an increase in output by the same proportion, indicating that the production function has constant returns to scale. This does not rule out the possibility of enhancing the production process through technological advances.

Question 2

Which of the following is a determinant of productivity?

Accepted Answer

All of the above factors contribute to productivity. Human capital refers to the knowledge and skills possessed by workers, which can increase productivity. Physical capital includes tools, machinery, and other equipment that aid in production. Natural resources, such as land and raw materials, can also impact productivity. Therefore, all three factors are important determinants of productivity.

Question 3

If a production function has constant returns to scale, output can be doubled if

Accepted Answer

If the production function has constant returns to scale, doubling all of the inputs will result in the output also doubling. This is because a production function with constant returns to scale exhibits proportionality between inputs and outputs, meaning that increasing all inputs by the same proportion will result in a corresponding increase in output by that same proportion.

Question 4

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

Accepted Answer

The answer of You bake cookies. One day you double...

Question 5

Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Accepted Answer

If the restrictions reduce the total number of hours worked, then output will also fall because there will be less labor input into production. However, productivity may rise because workers will have less time to waste and will be more focused during the hours they are allowed to work. Therefore, choice B) is the best answer.

Question 6

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

The answer of If your firm's production function has constant...

Question 7

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

Accepted Answer

If the production function has constant returns to scale, then increasing all inputs by the same proportion should result in a proportional increase in output. Since all inputs are being increased by the same proportion of 60%, the output should also increase by that same proportion of 60%.

Question 8

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Accepted Answer

Doubling the time and inputs and getting twice as many smoothies indicates that the smoothie production function has constant returns to scale. This means that increasing all inputs by a certain proportion results in a proportional increase in output.

Question 9

Other things the same, which of the following could explain an increase in productivity?

Accepted Answer

An increase in either human capital or physical capital could explain an increase in productivity. Human capital refers to the knowledge, skills, and experience of workers, while physical capital refers to the tools, equipment, and infrastructure used to produce goods and services. Both of these factors can contribute to increased productivity by allowing workers to produce more output per unit of time.

Question 10

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

Accepted Answer

If the number of workers in an economy doubled and all other inputs stayed the same, the productivity would fall, but it would still be greater than one-half of its former value. This is because the constant returns to scale mean that doubling the number of workers would not double the output, but it would increase it by less than double. Therefore, productivity would decrease but still be greater than one-half of its former value.

Question 11

Scenario 7-1. An economy's production form takes the form Y = AF(L, K, H, N).
-Refer to Scenario 7-1. K represents the quantity of

Accepted Answer

K represents physical capital only.

Question 12

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Accepted Answer

The fact that the quantity of output doubles when all inputs are doubled indicates that the production function exhibits constant-returns-to-scale. This means that when all inputs are increased by a certain proportion, output increases by the same proportion, implying that the production process can be enhanced by technological advances that increase efficiency and effectiveness of utilizing inputs.

Question 13

In the equation for the production function H/L represents

Accepted Answer

The answer of In the equation for the production function...

Question 14

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

Accepted Answer

With constant returns to scale, doubling all inputs (physical capital stock, natural resources, and human capital) should result in doubling output. However, as the labor force size remained the same, there would be diminishing marginal returns to the additional inputs, resulting in an increase in output and productivity, but less than double.

Question 15

If there are constant returns to scale, the production function can be written as

Accepted Answer

The production function with constant returns to scale is homogeneous of degree 1, which means that multiplying all input factors by a constant number results in the output also being multiplied by that constant number. In other words, Y increases proportionally with the increase in the scale of production. Option C represents this with Y/L = A F(1, K/L, H/L, N/L), where scaling all inputs by L/L results in the output Y increasing proportionally. The other options do not reflect this property of constant returns to scale.

Question 16

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

Accepted Answer

Constant returns to scale means that if all inputs are doubled, output will also double. However, because the input is doubled, productivity (output per input) will remain the same. Therefore, choice B is the correct answer.

Question 17

An economy's production function has the constant-returns-to-scale property. If the economy's labor force doubled and all other inputs stayed the same, then real GDP would

Accepted Answer

The answer of An economy's production function has the constant-returns-to-scale...

Question 18

Which of the following would increase productivity?

Accepted Answer

All of the given options - an increase in physical capital, human capital, and natural resources per worker - can increase productivity. Having more physical capital (e.g. machinery, technology) allows workers to produce more efficiently and quickly, while having more human capital (e.g. education, skills) allows workers to be more effective at their jobs. Finally, having access to more natural resources can increase the potential output of an economy. Therefore, all of these factors can contribute to higher productivity levels.

Question 19

In the equation for the production function Y/L represents

Accepted Answer

The answer of In the equation for the production function...

Question 20

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

Accepted Answer

Since there are constant returns to scale and all factors of production have doubled, output will double as well. However, since technology is unchanged, productivity (output per unit of input) will remain the same. Therefore, the correct answer is B) output, but not productivity.

Quiz 7: Production and Growth

In a particular production process, if the quantities of all inputs used are increased by 60 percent, then the quantity of output increases by 60 percent as well. This means that

Which of the following is a determinant of productivity?

If a production function has constant returns to scale, output can be doubled if

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Other things the same, which of the following could explain an increase in productivity?

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

Scenario 7-1. An economy's production form takes the form Y = AF(L, K, H, N) . -Refer to Scenario 7-1. K represents the quantity of

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

In the equation for the production function H/L represents

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

If there are constant returns to scale, the production function can be written as

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

An economy's production function has the constant-returns-to-scale property. If the economy's labor force doubled and all other inputs stayed the same, then real GDP would

Which of the following would increase productivity?

In the equation for the production function Y/L represents

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?