Question 1

Assuming you don't want to die, why is it better to have a common disease than a rare disease?

Accepted Answer

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Question 2

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Question 3

An economy has a steady state output level of 50. The economy's labor, technology, and education levels are constant, and the economy is described by the production function: . Depreciation is described by the linear function D =  0.05K. What is the steady-state level of capital stock and what is the level of investment needed to maintain it?

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Question 4

An economy has a capital stock of 100. The economy's labor, technology, and education levels are constant, and the economy has a production function that can be described by .  The depreciation rate can be described by the linear function depreciation = 0.02K. Suppose the initial investment rate is investment = 0.2 and then some foreign savings start flowing into the economy. This investment function then changes to 0.3. By how much does the steady state capital stock change? By how much does output change? Show all your calculations.

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Question 5

Using a graph showing private marginal cost, private marginal benefit, and social marginal benefit, show how government subsidies of research and development might mitigate the limited idea creation effect of spillovers.

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Question 6

Explain why patents are important for innovation.

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Question 7

Using a diagram of the Solow growth model, show how countries can achieve sustained long run economic growth.

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Question 8

As more countries gain wealth, private firms will increase R&D to anticipate a larger market.

Accepted Answer

As countries gain wealth, their purchasing power increases, leading to larger markets for goods and services. Private firms will increase research and development efforts to anticipate this growth and capture a greater share of the market.

Question 9

An economy has a steady-state output level of 9. The economy's labor, technology, and education levels are constant, and the economy is described by the production function:  Depreciation is described by the linear function D = 0.06K. What is the steady-state level of capital stock and what is the level of investment needed to maintain it?

Accepted Answer

The answer of An economy has a steady-state output level...

Question 10

The increase in world population will lead to an increase in ideas for production.

Accepted Answer

With more people comes more creativity, innovation, and different perspectives, which can lead to new ideas for production. Additionally, as the demand for goods and services increases with a growing population, businesses may have to come up with new and more efficient ways to produce and distribute products.

Question 11

Worldwide per capita income continues to grow at only 0.5 percent.

Accepted Answer

This statement is false. According to World Bank data, worldwide per capita income has been growing at an average rate of approximately 1.8 percent per year over the past three decades.

Question 12

Explain why entrepreneurs are often viewed as job destroyers.
B. Entrepreneurs tend to develop new and better ways of doing things including the production of existing products. When these new and better ways to produce products replace people with machines, they lead to decreases in employment.

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Question 13

A good is nonrivalrous if more than one person can use it at the same time without impeding someone else's use of the good.

Accepted Answer

A nonrivalrous good can be used by multiple people simultaneously without reducing the amount available for use by others. Examples of nonrivalrous goods include digital media such as music and software, public parks, and clean air.

Question 14

A patient with a rare disease has the same chance of survival as one with a common disease, thanks to the spillover effect.

Accepted Answer

The statement is false. A rare disease may not have the same chance of survival as a common disease due to a lack of research, funding, and expertise. The spillover effect refers to the benefits that research and treatments for common diseases can have on rare diseases, but it does not necessarily guarantee equal chances of survival.

Question 15

Both institutions and property rights are becoming less favorable to entrepreneurship throughout the world.

Accepted Answer

Globally, there is a trend towards improving institutions and strengthening property rights to foster entrepreneurship, as many countries recognize the importance of entrepreneurs in driving economic growth and innovation.

Quiz 26: Gdp and the Measurement of Progress