Question 1

Which of the following best defines technological knowledge?
A)It is the same as human capital.
B)It is available information on how to produce things.
C)It is the resources expended transmitting society's understanding to the labour force.
D)It is knowledge about new, unexploited natural resources.

Accepted Answer

Technological knowledge refers to the know-how and information about how to produce goods and services using various technologies, tools, and techniques. It includes information about production processes, materials, equipment, and organizational factors that affect production, such as quality control and supply chain management. Technological knowledge is distinct from human capital, which refers to the skills, education, and experience of workers. It is also distinct from natural resource knowledge, which refers to information about the location, quantity, and quality of natural resources. The transmission of technological knowledge to the labor force may require resources, such as training and education, but it is primarily about the dissemination of information, not the expenditure of resources.

Question 2

Which of the following would increase productivity,everything else being the same?
A)an increase in population
B)an increase in the number of hours of work per week
C)an increase in prices
D)an increase in physical capital per worker

Accepted Answer

An increase in physical capital per worker would increase productivity by providing workers with better tools and equipment to do their jobs more efficiently. Increased population or hours of work per week may lead to short-term increases in output but could also lead to burnout and reduced productivity in the long run. An increase in prices would not directly affect productivity.

Question 3

Your company discovers a better way to produce mousetraps,but your better methods are not apparent from the mousetraps themselves.What kind of knowledge is this?
A)common technological knowledge
B)common, but not technological, knowledge
C)proprietary technological knowledge
D)proprietary, but not technological, knowledge

Accepted Answer

The better methods for producing mousetraps are not apparent from the mousetraps themselves, indicating that they are not common knowledge. Additionally, since they are not apparent, it implies that they are unique and not easily replicable, making them proprietary. Therefore, the knowledge is proprietary technological knowledge.

Question 4

If a production function has constant returns to scale,how can output be doubled?
A)by doubling labour
B)by doubling any one of the inputs
C)by doubling all of the inputs
D)by increasing all inputs by more than double

Accepted Answer

If a production function has constant returns to scale, then doubling all inputs will double the output. This is because constant returns to scale means that increasing all inputs by the same proportion will result in the output increasing by the same proportion. Therefore, if all inputs are doubled, the output will also be doubled.

Question 5

If the number of workers in an economy doubled,all other inputs stayed the same,and there were constant returns to scale,what would happen to productivity?
A)It would fall to half its former value.
B)It would fall, but by less than half.
C)It would stay the same.
D)It would rise, but by less than double.

Accepted Answer

The answer of If the number of workers in an...

Question 6

Using the production function and notation in the text,what does K/L measure?
A)natural resources per worker
B)human capital per worker
C)output per worker
D)physical capital per worker

Accepted Answer

K represents capital and L represents labor. Therefore, K/L represents physical capital per worker.

Question 7

A management professor discovers a way for corporate management to operate more efficiently.He publishes his findings in a journal.How are his findings best defined?
A)proprietary knowledge, because only who the person pays for the journal has access to the findings
B)common knowledge, because scientific publications are not subject to copyright
C)proprietary knowledge, because the discoverer has intellectual property rights over the findings
D)common knowledge, because all are free to use the findings

Accepted Answer

The answer of A management professor discovers a way for...

Question 8

Which of the following terms refers to the relationship between the quantity of output created and the quantity of inputs needed to create it?
A)the capital accumulation function
B)technological knowledge
C)the production function
D)human capital

Accepted Answer

The production function measures the relationship between the quantity of inputs (such as labor and capital) and the quantity of output produced. It shows how much output can be produced with a given set of inputs, and how much additional output can be produced by increasing the inputs. The other choices, such as the capital accumulation function and human capital, are related concepts but do not specifically refer to the relationship between inputs and outputs.

Question 9

Which of the following best explains how investment and growth rates relate across countries?
A)They are negatively related.
B)They are positively related.
C)They are negatively related for rich countries, but positively related for poor countries.
D)They are positively related for rich countries, but negatively related for poor countries.

Accepted Answer

Investment and growth rates are positively related across countries. Higher levels of investment lead to increased output and productivity, which in turn drives economic growth. This relationship holds true for both rich and poor countries.

Question 10

Which of the following is one of the consequences of accumulating capital?
A)Accumulating capital requires that society sacrifice consumption in the present.
B)Accumulating capital allows society to consume more in the present.
C)Accumulating capital decreases saving rates.
D)Accumulating capital increases income inequality.

Accepted Answer

Accumulating capital requires investment which means society must sacrifice consumption in the present in order to invest for future growth. This sacrifice of present consumption is a consequence of accumulating capital.

Question 11

If the production function for an economy had constant returns to scale,the labour force doubled,and all other inputs stayed the same,what would happen to real GDP?
A)It would stay the same.
B)It would increase by 50 percent.
C)It would increase, but by something less than double.
D)It would double.

Accepted Answer

The answer of If the production function for an economy...

Question 12

Suppose that an economy with constant returns to scale doubled its physical capital stock,doubled its available natural resources,and doubled its human capital,but kept the size of the labour force the same.How does the change in output compare to the change in productivity?
A)Output would stay the same and so would its productivity.
B)Output and productivity would increase, but by less than double.
C)Output and productivity would increase by more than double.
D)Output would increase by less than double, but productivity would double.

Accepted Answer

Since the labour force remains the same, doubling the other factors of production (physical capital, natural resources, and human capital) would result in an increase in output, but not by double. This is because of diminishing marginal returns: as more of a factor of production is added while holding others constant, the increase in output will eventually decrease. As a result, productivity (output per unit of input) would also increase but by less than double.

Question 13

How can a government encourage growth and,in the long run,raise the country's economic standard of living?
A)by encouraging population growth
B)by encouraging consumption
C)by encouraging saving and investment
D)by increasing government spending

Accepted Answer

Encouraging saving and investment can lead to increased capital accumulation, which in turn can lead to increased productivity and economic growth over the long run. Encouraging population growth or consumption may provide short term economic benefits, but can ultimately strain resources and hinder long term growth. Increasing government spending can lead to short term economic stimulus, but can also lead to high levels of debt and be unsustainable in the long run.

Question 14

If your firm has constant returns to scale,what would happen to your firm's output if you doubled all your inputs?
A)It would not change.
B)It would increase, but by less than double.
C)It would double.
D)It would more than double.

Accepted Answer

With constant returns to scale, doubling all inputs should result in a doubling of output. This is because the production function exhibits constant unitary elasticity, meaning that a proportionate increase in inputs will yield a proportionate increase in output. Therefore, the correct answer is C.

Question 15

Suppose that over the past ten years productivity grew faster in Oceania than in Freedonia and the population of both countries was unchanged.Which of the following can we conclude?
A)Real GDP per person must be higher in Oceania than in Freedonia.
B)Real GDP per person grew faster in Oceania than in Freedonia.
C)The standard of living must be higher in Oceania than in Freedonia.
D)Oceania must have had a greater capital stock than Freedonia.

Accepted Answer

Productivity is a measure of economic output per unit of input. If productivity grew faster in Oceania than in Freedonia over the past ten years, it means that Oceania was able to produce more goods and services per unit of input (such as labor, capital, or technology) than Freedonia. If we assume that the population of both countries was unchanged, it means that Oceania was able to produce more output per person than Freedonia. Therefore, we can conclude that real GDP per person grew faster in Oceania than in Freedonia. However, we cannot determine whether real GDP per person is higher in Oceania than in Freedonia without more information. Similarly, we cannot conclude that the standard of living is higher in Oceania or that Oceania had a greater capital stock than Freedonia based on the information given.

Question 16

If there are constant returns to scale,how is the production function written?
A)xY = 2 x A F(L, K, H, N)
B)Y/L = A F(xL, xK, xH, xN)
C)Y/L = A F( 1, K/L, H/L, N/L)
D)L = A F(Y, K, H, N)

Accepted Answer

Constant returns to scale means that if inputs are increased by the same proportion, output will also increase by the same proportion. This can be expressed as Y/L = A F( 1, K/L, H/L, N/L). Therefore, choice C is the correct option.

Question 17

Suppose that real GDP grew more in Country A than in Country B last year.Which of the following does this imply concerning productivity or standard of living?
A)Country A must have a higher standard of living than country B.
B)Country A's productivity must have grown faster than country B's.
C)Country A must have a higher real GDP than Country B.
D)Country A's productivity must have been higher only if the population in the two countries grew at the same rate.

Accepted Answer

The answer of Suppose that real GDP grew more in...

Question 18

Suppose you bake cookies.One day,you double the time you spend baking and double the number of chocolate chips,flour,eggs,and all your other inputs in order to bake twice as many cookies.What kind of production function is this?
A)decreasing returns to scale
B)zero returns to scale
C)constant returns to scale
D)increasing returns to scale

Accepted Answer

When you double all inputs and the output also doubles, it indicates constant returns to scale.

Question 19

One of the ten principles of economics is that people face tradeoffs.The growth that arises from capital accumulation is not a free lunch.What is the opportunity cost of that capital accumulation?
A)People need to work longer hours, thus having less time for leisure.
B)People need to consume less goods and services now in order to enjoy more consumption in the future.
C)People need to recycle resources so that future generations can produce goods and services with the accumulated capital.
D)People need to devote less time in school and more at work.

Accepted Answer

The opportunity cost of capital accumulation is that people need to consume less goods and services now in order to enjoy more consumption in the future. This is because resources used to accumulate capital could have been used for immediate consumption.

Question 20

Which of the following does Y/L refer to?
A)productivity
B)output
C)the availability of natural resources
D)the amount of human capital

Accepted Answer

The answer of Which of the following does Y/L refer...

Quiz 7: Production and Growth

Which of the following best defines technological knowledge?

Which of the following would increase productivity,everything else being the same?

Your company discovers a better way to produce mousetraps,but your better methods are not apparent from the mousetraps themselves.What kind of knowledge is this?

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

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

Using the production function and notation in the text,what does K/L measure?

A management professor discovers a way for corporate management to operate more efficiently.He publishes his findings in a journal.How are his findings best defined?

Which of the following terms refers to the relationship between the quantity of output created and the quantity of inputs needed to create it?

Which of the following best explains how investment and growth rates relate across countries?

Which of the following is one of the consequences of accumulating capital?

If the production function for an economy had constant returns to scale,the labour force doubled,and all other inputs stayed the same,what would happen to real GDP?

Suppose that an economy with constant returns to scale doubled its physical capital stock,doubled its available natural resources,and doubled its human capital,but kept the size of the labour force the same.How does the change in output compare to the change in productivity?

How can a government encourage growth and,in the long run,raise the country's economic standard of living?

If your firm has constant returns to scale,what would happen to your firm's output if you doubled all your inputs?

Suppose that over the past ten years productivity grew faster in Oceania than in Freedonia and the population of both countries was unchanged.Which of the following can we conclude?

If there are constant returns to scale,how is the production function written?

Suppose that real GDP grew more in Country A than in Country B last year.Which of the following does this imply concerning productivity or standard of living?

Suppose you bake cookies.One day,you double the time you spend baking and double the number of chocolate chips,flour,eggs,and all your other inputs in order to bake twice as many cookies.What kind of production function is this?

One of the ten principles of economics is that people face tradeoffs.The growth that arises from capital accumulation is not a free lunch.What is the opportunity cost of that capital accumulation?

Which of the following does Y/L refer to?