Question 1

In a market economy, what is scarcity of resources most clearly reflected in?

Accepted Answer

Scarcity of resources is reflected in market prices. When a resource is scarce, the demand for it typically exceeds the available supply, driving up the price. This higher price signals to consumers and producers that the resource is valuable, and encourages conservation and innovation to find alternative sources or substitutes.

Question 2

Clive Lloyd is a professor. Which of the following is a part of his human capital?

Accepted Answer

Clive Lloyd's human capital includes his experience in the classroom, his knowledge and skills in teaching, and his ability to effectively communicate with students. These are all aspects of his personal characteristics and professional expertise that contribute to his value as an educator. The computer he uses and the software he uses to assess students' work are tools that support his teaching, but they are not part of his human capital. The amount of time he spends with his students may be a factor that affects the quality of his teaching, but it is not a part of his human capital per se.

Question 3

Which has been happening to the market prices of most natural resources (adjusted for inflation)?

Accepted Answer

Natural resource prices have been unstable and volatile in recent years, but overall they have been stable or falling when adjusted for inflation. This can be attributed to a combination of factors, including increased supply from new extraction techniques, slower economic growth in some regions, and efforts to transition to renewable energy sources.

Question 4

Based on historical data on the prices of natural resources, which statement best describes how natural resources limit economic growth?

Accepted Answer

Historically, the prices of natural resources have decreased in constant dollars, indicating that they are not becoming scarcer over time, suggesting that they do not inherently limit economic growth.

Question 5

Which of the following is considered human capital?

Accepted Answer

Human capital refers to the knowledge, skills, and abilities possessed by individuals that make them productive and valuable to employers. Option D, knowledge acquired from an apprenticeship program, directly relates to the development of an individual's skills and knowledge, making it an example of human capital. Options A, B, and C do not directly relate to the skills and knowledge possessed by individuals and are therefore not examples of human capital.

Question 6

Which statement best defines proprietary technology?

Accepted Answer

Proprietary technology is knowledge that is only known by the company that discovers it and is kept as a trade secret to maintain a competitive advantage over other companies.

Question 7

Which statement best explains the falling inflation-adjusted prices of most of the natural resources?

Accepted Answer

Our ability to conserve and efficiently use natural resources has improved, often outpacing their rate of depletion, leading to falling inflation-adjusted prices.

Question 8

What would we expect to happen with prices or quantities of natural resources if they were becoming scarcer?

Accepted Answer

The answer of What would we expect to happen with...

Question 9

In a market economy, what does the real, or inflation-adjusted, price of a resource measure?

Accepted Answer

The real or inflation-adjusted price of a resource measures its relative scarcity in a market economy. As the availability of a resource decreases, its price increases. Adjusting for inflation allows for a more accurate comparison of prices over time. The other options - contribution to revenue, relative importance, and contribution to efficiency - may influence the price of a resource, but they are not the primary factors affecting its real price.

Question 10

Which statement best explains economists' understanding of the facts concerning the relationship between natural resources and economic growth?

Accepted Answer

Economists generally believe that while natural resources can be beneficial for economic growth, they are not the sole determinant of a country's level of development. Countries with fewer natural resources can still achieve high standards of living through factors such as human capital, innovation, and trade. Therefore, choice D is the best explanation of economists' understanding of the relationship between natural resources and economic growth.

Question 11

What indicates greater scarcity of a natural resource?

Accepted Answer

An increase in the price of a natural resource typically indicates greater scarcity, as it reflects the balance between supply and demand, with higher prices suggesting limited availability relative to demand.

Question 12

What is an example of a nonrenewable resource?

Accepted Answer

Natural gas is a fossil fuel that is a finite resource and cannot be replenished quickly enough to match its rate of consumption. Once used up, it cannot be easily replaced.

Question 13

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

Accepted Answer

In a market economy, resources become scarcer when their price rises relative to other prices. This is because an increase in price indicates a higher demand for the resource, which in turn means that there is less of it available. As the resource becomes scarcer, its price continues to rise until it reaches a point where consumers are no longer willing to pay for it or substitutes become more attractive. Therefore, A is the best choice. B, C, and D may be factors to consider, but they do not definitively indicate that a resource has become scarcer in a market economy.

Question 14

In the country of Kasnia, the price of copper increased from $6 per kilogram to $6.60 per kilogram during a time when the overall price level increased by 6 percent. During this period, what happened to the real price of copper?

Accepted Answer

The overall price level increased by 6 percent, meaning that prices in Kasnia on average increased by 6 percent. Therefore, if the price of copper increased from $6 to $6.60, it increased by 10 percent (0.60/6). However, in terms of real price, meaning the price adjusted for inflation, we need to subtract the inflation rate from the nominal price increase. 6 percent inflation means that the buying power of the Kasnian currency decreased by 6 percent. Therefore, the real price increase of copper is only 10 percent - 6 percent = 4 percent lower. In other words, the real price of copper has decreased by about 4 percent.

Question 15

Which of the following is considered human capital?

Accepted Answer

Human capital refers to the knowledge, skills, and abilities of individuals that can be used to produce economic value. An apprentice chef working in an upscale restaurant has acquired skills and knowledge through experience, training, and education, making him a form of human capital. The other options, such as lunches served in a school cafeteria, a new convection oven, and pots and pans, are all physical resources or capital, but not human capital.

Question 16

Which of the following best describes natural resources?

Accepted Answer

Natural resources refer to inputs such as land, rivers, minerals, and other materials that are found in nature and can be used for production processes.

Question 17

Which of the following is considered human capital?

Accepted Answer

Human capital refers to the knowledge, skills, and abilities that a person possesses. Therefore, the things a person has learned, such as the knowledge gained from taking a class, are considered human capital. Options A, B, and D refer to physical aspects of a workplace or job and do not pertain to human capital.

Question 18

What best defines human capital?

Accepted Answer

Human capital refers to the knowledge and skills that workers acquire through education, training, and experience. It is an intangible asset that forms a significant part of a country's wealth and productivity. Therefore, option A is the best choice as it defines human capital accurately. Options B, C, and D are incorrect because they refer to physical capital, labour force, and wages paid, respectively.

Question 19

Which list contains, in this order, natural resources, human capital, and physical capital?

Accepted Answer

Natural resources are materials or substances that occur in nature and can be used for economic gain. Human capital refers to the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country. Physical capital consists of tangible, man-made objects that aid in the production process. For a railroad, fuel is a natural resource, railroad engineers represent human capital, and railroad tracks are an example of physical capital.

Question 20

A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. How would an economist respond to this report?

Accepted Answer

An economist would likely disagree with the report because it ignores the potential for technological advances to mitigate the effects of natural resource depletion. Technological advances can lead to more efficient use of resources or the development of alternative sources. Additionally, labor and capital are important determinants of economic growth, and there is potential for these factors to drive growth even in the face of natural resource constraints. Emerging markets may also discover new natural resources, but this is not a guaranteed solution to the problem. Rising natural resource prices may be evidence of the depletion of resources, but it is not a definitive indicator of a resource deficit leading to the end of economic growth.

Quiz 7: Production and Growth

In a market economy, what is scarcity of resources most clearly reflected in?

Clive Lloyd is a professor. Which of the following is a part of his human capital?

Which has been happening to the market prices of most natural resources (adjusted for inflation) ?

Based on historical data on the prices of natural resources, which statement best describes how natural resources limit economic growth?

Which of the following is considered human capital?

Which statement best defines proprietary technology?

Which statement best explains the falling inflation-adjusted prices of most of the natural resources?

What would we expect to happen with prices or quantities of natural resources if they were becoming scarcer?

In a market economy, what does the real, or inflation-adjusted, price of a resource measure?

Which statement best explains economists' understanding of the facts concerning the relationship between natural resources and economic growth?

What indicates greater scarcity of a natural resource?

What is an example of a nonrenewable resource?

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

In the country of Kasnia, the price of copper increased from $6 per kilogram to $6.60 per kilogram during a time when the overall price level increased by 6 percent. During this period, what happened to the real price of copper?

Which of the following is considered human capital?

Which of the following best describes natural resources?

Which of the following is considered human capital?

What best defines human capital?

Which list contains, in this order, natural resources, human capital, and physical capital?