Question 1

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

Accepted Answer

A) decreasing returns to scale. 
B) zero returns to scale. 
C) constant returns to scale. 
D) increasing returns to scale.

Question 2

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Accepted Answer

The answer of At first patents might seem like a...

Question 3

Other things equal, the likelihood that a country will experience a relatively-high level of income is greater if the country

Accepted Answer

A) pursues inward-oriented policies. 
B) has natural seaports. 
C) minimizes the role of the courts in its economy. 
D) enacts policies to encourage consumption and discourage saving.

Question 4

If the price of a good has risen over time,

Accepted Answer

A) it must have become more scarce. 
B) it must have become less scarce. 
C) it has become more scarce only if the price adjusted for inflation has risen. 
D) it has become less scarce only if the price adjusted for inflation has risen.

Question 5

Other things the same, when an economy increases its saving rate

Accepted Answer

A) consumption and production rise now. 
B) consumption rises now and production rises later 
C) consumption falls now and production rises later. 
D) consumption falls now and production falls later.

Question 6

In determining living standards, productivity plays a key role

Accepted Answer

A) for individuals, but not for nations. 
B) for nations, but not for individuals. 
C) for both nations and individuals. 
D) for neither nations nor individuals.

Question 7

Both Arnold and Will work 10 hours a day. Arnold can produce six baskets of goods per hour while Will can produce four baskets of the same goods per hour. It follows that Arnold's

Accepted Answer

A) productivity is greater than Will's. 
B) output is greater than Will's. 
C) standard of living is higher than Will's. 
D) All of the above are correct.

Question 8

Table 25-1.
Athens and Troy both produce only ribs and baked potatoes. 
-Refer to Table 25-1. Which of the following is correct?

Accepted Answer

A) Both productivity and the standard of living are higher in Athens than Troy. 
B) Productivity is higher in Athens while the standard of living is higher in Troy 
C) Productivity is higher in Troy while the standard of living is higher in Athens. 
D) Both productivity and the standard of living are higher in Troy than Athens.

Question 9

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas

Accepted Answer

A) private goods rather than public goods. This gives people more incentive to engage in research. 
B) private goods rather than public goods. This gives people less incentive to engage in research. 
C) public goods rather than private goods. This gives people more incentive to engage in research. 
D) public goods rather than private goods. This gives people more incentive to engage in private research.

Question 10

Industrial machinery is an example of

Accepted Answer

A) a factor of production that in the past was an output from the production process. 
B) physical capital. 
C) something that influences productivity. 
D) All of the above are correct.

Question 11

How would an economist typically assess the extent of economic progress in a nation?

Accepted Answer

The answer of How would an economist typically assess the...

Question 12

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

Accepted Answer

A) proprietary and common knowledge. 
B) common, but not proprietary, knowledge. 
C) proprietary, but not common, knowledge. 
D) neither proprietary nor common knowledge.

Question 13

Which of the following is a correct way to measure productivity?

Accepted Answer

A) Divide the number of hours worked by the quantity of output. 
B) Divide the quantity of output by the number of hours worked. 
C) Determine how much output is produced in a given time. 
D) Determine how much time it takes to produce a unit of output.

Question 14

Other things the same, domestic investment will increase a country's real GDP by more than foreign investment.

Accepted Answer

A) True 
 B)False

Question 15

If it could increase its growth rates slightly, a country with low income would catch up with rich countries in about ten years.

Accepted Answer

A) True 
 B)False

Question 16

International data on real GDP per person gives us a sense of how standards of living vary across countries.

Accepted Answer

A) True 
 B)False

Question 17

The dictator of a country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

Accepted Answer

A) reduce real GDP per person and productivity. 
B) reduce real GDP per person but not productivity. 
C) reduce productivity but not real GDP per person. 
D) None of the above is correct.

Question 18

In 2014, real GDP per person in Bangladesh was

Accepted Answer

A) about 3 times as high as it was in the U.S. in 1870. 
B) about twice as high as it was in the U.S. in 1870. 
C) about the same as it was in the U.S. in 1870. 
D) less than it was in the U.S. in 1870.

Question 19

One can argue that the average American today is "richer" than the richest American 100 years ago, given that 100 years ago,

Accepted Answer

A) people's nominal incomes were, on average, much lower than they are today. 
B) personal fortunes were not accurately measured. 
C) many of the goods and services that we now take for granted were not available. 
D) international trade had not yet begun to flourish.

Question 20

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

Accepted Answer

A) have no impact on the level of real GDP per person. 
B) immediately and permanently decrease the level of real GDP per person. 
C) immediately and permanently increase the level of real GDP person. 
D) gradually raise the level of real GDP per person.

Exam 25: Production and Growth

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

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Other things equal, the likelihood that a country will experience a relatively-high level of income is greater if the country

If the price of a good has risen over time,

Other things the same, when an economy increases its saving rate

In determining living standards, productivity plays a key role

Both Arnold and Will work 10 hours a day. Arnold can produce six baskets of goods per hour while Will can produce four baskets of the same goods per hour. It follows that Arnold's

Table 25-1. Athens and Troy both produce only ribs and baked potatoes. -Refer to Table 25-1. Which of the following is correct?

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas

Industrial machinery is an example of

How would an economist typically assess the extent of economic progress in a nation?

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

Which of the following is a correct way to measure productivity?

Other things the same, domestic investment will increase a country's real GDP by more than foreign investment.

If it could increase its growth rates slightly, a country with low income would catch up with rich countries in about ten years.

International data on real GDP per person gives us a sense of how standards of living vary across countries.

The dictator of a country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

In 2014, real GDP per person in Bangladesh was

One can argue that the average American today is "richer" than the richest American 100 years ago, given that 100 years ago,

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely