Question 1

The application of new technologies to the production process will increase:

Accepted Answer

New technologies increase worker productivity by giving workers better tools. This increases average labor productivity.

Question 2

The introduction of new technologies that allow producers to specialize in those activities in which they are relatively more efficient is an example of how overall productivity increases because of the:

Accepted Answer

This example illustrates the Principle of Comparative Advantage, that overall productivity increases when producers concentrate on those activities at which they are relatively most efficient.

Question 3

Three workers run a house painting business and always work the same number of hours together. The paint they use requires applying two coats. Each worker paints 200 square feet per hour using a roller or 80 square feet per hour using a brush. If a technological advance provides a paint that only requires one coat, their average labor productivity per hour as a team:

Accepted Answer

This technological advance improves average labor productivity of individuals and the team whether they use a roller or a brush.

Question 4

The discovery and utilization of vast, previously unknown oil and mineral deposits in a country will increase:

Accepted Answer

Abundant natural resources, given freely from nature, usually increase average labor productivity.

Question 5

The introduction of new technologies to production is ________ source of productivity improvement.

Accepted Answer

Technological advances, like the invention and diffusion of cheap computing, have a large and sudden contribution to productivity improvements.

Question 6

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

Accepted Answer

The marginal return to the first machine was 5,000 packages, the marginal return to the second machine was 4,000 packages (9,000 - 5,000)and the marginal return to the third machine was 3,000 packages (12,000 - 9,000). Thus, the marginal return to the third machine has to be less than 3,000 packages, which makes the total less than 15,000 packages.

Question 7

Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will increase output ________ in Alpha compared to Beta, holding other factors constant.

Accepted Answer

Since Alpha starts out with more capital per worker, the marginal increase in worker output in Alpha is less than the marginal increase in Beta (where workers have much less capital to begin with).

Question 8

Providing a fixed number of workers with additional capital will ________ average labor productivity at a(n)________ rate.

Accepted Answer

More capital per worker increases average labor productivity, but this increase comes at a decreasing rate.

Question 9

Gamma has $30,000 of capital per worker, while Omega has $7,500 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will increase output ________ in Gamma compared to Omega, holding other factors constant.

Accepted Answer

Since Gamma starts out with more capital per worker, the marginal increase in worker output in Gamma is less than the marginal increase in Omega (where workers have much less capital to begin with).

Question 10

Business managers are people who:

Accepted Answer

This is the definition of "business managers." Note: they are different from entrepreneurs because entrepreneurs take risks whereas business managers often do not.

Question 11

Entrepreneurs are people who:

Accepted Answer

Entrepreneurs take business risks to earn profits. As entrepreneurs they create new economic enterprises.

Question 12

Diminishing returns to capital is a consequence of firms' incentives to use each piece of capital as productively as possible and illustrates the:

Accepted Answer

Diminishing returns to any factor input is a restatement of the principle of increasing opportunity costs.

Question 13

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

Accepted Answer

The marginal return to the first machine was 10,000 packages, the marginal return to the second machine was 3,000 packages (13,000 - 10,000)and the marginal return to the third machine was 2,000 packages (15,000 - 13,000). Thus, the marginal return to the third machine has to be less than 2,000 packages, which makes the total less than 17,000 packages.

Question 14

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 15

Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved ________.

Accepted Answer

While all inputs are subject to the law of diminishing returns, only physical capital is subject to diminishing returns to capital.

Question 16

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 17

Usually an abundance of natural resources ________ average labor productivity.

Accepted Answer

Abundant natural resources, given freely from nature, usually increase average labor productivity.

Question 18

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 19

When new technologies are applied to the production and distribution of goods and services:

Accepted Answer

Although new technologies generally improve average labor productivity, technological additions are still subject to diminishing returns to capital.

Question 20

Most economists agree that ________ are the single most important source of productivity improvements.

Accepted Answer

Technological advances, like the invention and diffusion of cheap computing, have a large and sudden contribution to productivity.

Quiz 19: Economic Growth, Productivity, and Living Standards

The application of new technologies to the production process will increase:

The introduction of new technologies that allow producers to specialize in those activities in which they are relatively more efficient is an example of how overall productivity increases because of the:

The discovery and utilization of vast, previously unknown oil and mineral deposits in a country will increase:

The introduction of new technologies to production is ________ source of productivity improvement.

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

Providing a fixed number of workers with additional capital will average labor productivity at a(n) rate.

Business managers are people who:

Entrepreneurs are people who:

Diminishing returns to capital is a consequence of firms' incentives to use each piece of capital as productively as possible and illustrates the:

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

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:

Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved ________.

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

Usually an abundance of natural resources ________ average labor productivity.

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 new technologies are applied to the production and distribution of goods and services:

Most economists agree that ________ are the single most important source of productivity improvements.

Quiz 19: Economic Growth, Productivity, and Living Standards

The application of new technologies to the production process will increase:

The introduction of new technologies that allow producers to specialize in those activities in which they are relatively more efficient is an example of how overall productivity increases because of the:

The discovery and utilization of vast, previously unknown oil and mineral deposits in a country will increase:

The introduction of new technologies to production is ________ source of productivity improvement.

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

Providing a fixed number of workers with additional capital will ________ average labor productivity at a(n) ________ rate.

Business managers are people who:

Entrepreneurs are people who:

Diminishing returns to capital is a consequence of firms' incentives to use each piece of capital as productively as possible and illustrates the:

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

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:

Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved ________.

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

Usually an abundance of natural resources ________ average labor productivity.

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 new technologies are applied to the production and distribution of goods and services:

Most economists agree that ________ are the single most important source of productivity improvements.

Providing a fixed number of workers with additional capital will average labor productivity at a(n) rate.

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