d.
is the same as the quantity of labor.
115. Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists
include these skills as part of Perry’s
a.
proprietary knowledge.
b.
technological knowledge.
c.
human capital.
d.
physical capital.
116. Matt is going to college to become a pharmacist. What he learns about existing information increases
a.
b.
c.
d.
117. A management professor discovers a way for corporate management to operate more efficiently. He publishes his
findings in a journal. His findings are
a.
proprietary and common knowledge.
b.
common, but not proprietary, knowledge.
c.
proprietary, but not common, knowledge.
d.
neither proprietary nor common knowledge.
118. Your company discovers a better way to produce mousetraps, but your better methods are not apparent from the
mousetraps themselves. Your knowledge of how to more efficiently produce mousetraps is
a.
common technological knowledge.
b.
common, but not technological, knowledge.
c.
proprietary technological knowledge.
d.
proprietary, but not technological, knowledge.
119. A professor at a university finds a way to reduce the costs of producing automobile glass. The method is very easy
for anyone to copy. A company develops a substance which prevents eyeglasses from smudging. It receives a patent on
the formula. Which of these are common technological knowledge?
a.
the method to reduce costs of producing automobile glass, and the formula for the substance that prevents
smudging
b.
the method to reduce costs of producing automobile glass, but not the formula for the substance that prevents
smudging
c.
the formula for the substance that prevents smudging, but not the method to reduce costs of producing
automobile glass
d.
neither the method to reduce costs of producing automobile glass nor the formula for the substance that
prevents smudging
120. Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were
a.
public goods and proprietary knowledge.
b.
public goods but not proprietary knowledge.
c.
private goods and proprietary knowledge.
d.
private goods but not proprietary knowledge.
121. Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy’s discovery
is
a.
physical capital. If Amy’s discovery leads to lower natural gas prices, it has made natural gas less scarce.
b.
physical capital. If Amy’s discovery leads to lower natural gas prices, it has made natural gas scarcer.
c.
technological knowledge. If Amy’s discovery leads to lower natural gas prices, it has made natural gas less
scarce.
d.
technological knowledge. If Amy’s discovery leads to lower natural gas prices, it has made natural gas scarcer.
122. Which of the following statements about inputs is correct?
a.
A forest is an example of a natural resource; it is also an example of a renewable resource.
b.
There is no distinction between human capital and technological knowledge.
c.
Human capital is a non-produced factor of production.
d.
Physical capital is a non-produced factor of production.
123. Which of the following statements is true?
a.
Natural resources per worker influence productivity only when those natural resources are renewable.
b.
The prices of most natural resources are stable or falling relative to other prices.
c.
Technology requires greater use of natural resources.
d.
The terms human capital and technological knowledge are used interchangeably.
124. Which of the following statements is true?
a.
The quantity of natural resources per worker can influence productivity.
b.
Technological knowledge and human capital are closely related.
c.
Over long periods of time, the prices of most natural resources are stable or falling, relative to other prices.
d.
All of the above are correct.
125. Which of the following lists contains, in this order, natural resources, human capital, and physical capital?
a.
For a restaurant: the land the restaurant was built on, the money it borrowed to buy supplies, the freezers
where the chops and steaks are kept.
b.
For a furniture company: wood, the skills and knowledge of its workers, saws.
c.
For a railroad: fuel, railroad engines, railroad tracks.
d.
None of the above is correct.
126. Which of the following lists contains, in this order, natural resources, physical capital, and human capital?
a.
For a shoe factory: leather, hand tools, the managers’ knowledge of shoe making.
b.
For a steel mill: the blast furnaces, iron ore, the workers.
c.
For an airline: oil used to make jet fuel, the pilots’ knowledge of flying, jets.
d.
None of the above is correct.
127. Other things the same, which of the following would increase productivity?
a.
an increase in either human or physical capital
b.
an increase in human capital but not an increase in physical capital
c.
an increase in physical capital but not an increase in human capital
d.
neither an increase in human capital nor an increase in physical capital
128. Which of the following would increase productivity?
a.
an increase in the physical capital stock per worker
b.
an increase in human capital per worker
c.
an increase in natural resources per worker
d.
All of the above are correct.
129. Which of the following is a determinant of productivity?
a.
human capital per worker
b.
physical capital per worker
c.
natural resources per worker
d.
All of the above are correct.
130. Which of the following is a determinant of productivity?
a.
human capital per worker
b.
physical capital per worker
c.
natural resources per worker
d.
All of the above are correct.
131. Which of the following statements is correct?
a.
Productivity is a determinant of human capital per worker.
b.
Technological knowledge is a determinant of productivity.
c.
Human capital and technological knowledge are the same thing.
d.
All of the above are correct.
132. Country A has twice as many workers as Country B. Country A also has twice as much physical capital, twice as
much human capital, and access to twice as many natural resources as Country B. Assuming constant-returns to scale,
which of the following is higher in Country A?
a.
both output per worker and productivity
b.
output per worker but not productivity
c.
productivity but not output per worker
d.
neither productivity nor output per worker
133. Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the
total number of hours worked in the economy, but all other factors that determine output are held fixed, then
a.
productivity and output both rise.
b.
productivity rises and output falls.
c.
productivity falls and output rises.
d.
productivity and output fall.
134. Suppose a country reduces restrictions on how many hours people can work. If reducing these restrictions increase
the total number of hours worked in the economy, but all other factors that determine output are held fixed, then
a.
productivity and output both rise.
b.
productivity rises and output falls.
c.
productivity falls and output rises.
d.
productivity and output fall.
135. Other things the same, which of the following could explain an increase in productivity?
a.
either an increase in human capital or an increase in physical capital
b.
an increase in human capital but not an increase in physical capital
c.
an increase in physical capital but not an increase in human capital
d.
neither an increase in human capital nor an increase in physical capital
136. In the equation for the production function Y/L represents
a.
productivity.
b.
output.
c.
the availability of natural resources.
d.
the amount of human capital.
137. In the equation for the production function H/L represents
a.
natural resources per worker.
b.
human capital per worker.
c.
output per worker.
d.
physical capital per worker.
138. In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as
well. This means that
a.
the production process cannot be enhanced by technological advances.
b.
no mathematical representation of the relevant production function can be formulated.
c.
the relevant production function has the limits-to-growth property.
d.
the relevant production function has the constant-returns-to-scale property.
139. If your firm’s production function has constant returns to scale, then if you double all your inputs, your firm’s output
will
a.
double and productivity will rise.
b.
double but productivity will not change.
c.
more than double and productivity will rise.
d.
more then double but productivity will not change.
140. If your firm’s production function has constant returns to scale, and if you double all your inputs, then your firm’s
productivity will
a.
not change.
b.
increase but not double.
c.
double.
d.
more than double.
141. In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of
output increases by 60% as well. This means that
a.
the production process cannot be enhanced by technological advances.
b.
no mathematical representation of the relevant production function can be formulated.
c.
the relevant production function has the limits-to-growth property.
d.
the relevant production function has constant-returns-to-scale.
142. If your firm’s production function has constant returns to scale and you increase all your inputs by 60%, then your
firm’s output will
a.
not change.
b.
increase, but by less than 60%
c.
increase by 60%
d.
increase by more than 60%.
143. You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all
your other inputs, and bake twice as many cookies. Your cookie production function has
a.
decreasing returns to scale.
b.
zero returns to scale.
c.
constant returns to scale.
d.
increasing returns to scale.
144. 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
a.
decreasing returns to scale.
b.
zero returns to scale.
c.
constant returns to scale.
d.
increasing returns to scale.
145. If there are constant returns to scale, the production function can be written as
a.
xY = 2xAF(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 = AF(Y, K, H, N).
146. If a production function has constant returns to scale, output can be doubled if
a.
labor alone doubles.
b.
all inputs but labor double.
c.
all of the inputs double.
d.
None of the above is correct.
147. Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural
resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would
double?
a.
both output and productivity
b.
output, but not productivity
c.
productivity, but not output
d.
neither productivity nor output
148. An economy’s production function has the constant-returns-to-scale property. If the economy’s labor force doubled
and all other inputs stayed the same, then real GDP would
a.
stay the same.
b.
increase by exactly 50 percent.
c.
increase by exactly 100 percent.
d.
increase, but not necessarily by either 50 percent or 100 percent.
149. If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to
scale, productivity would
a.
fall to less than one-half of its former value.
b.
fall, but it would still be greater than one-half of its former value.
c.
stay the same.
d.
rise but less than double.
150. If an economy with constant returns to scale were to double its physical capital stock, its available natural resources,
and its human capital, but leave the size of the labor force the same,
a.
its output would stay the same and so would its productivity.
b.
its output and productivity would increase, but less than double.
c.
its output and productivity would increase by more than double.
d.
None of the above is correct.
151. A certain production process requires only two types of inputs — capital and labor. In 2006, 100 units of labor and
50 units of capital were employed, and 100 units of output were produced. In 2013, 112 units of labor and 56 units of
capital were employed. If the production process displays constant returns to scale, then how many units of output were
produced in 2013?
a.
100
b.
112
c.
124
d.
144
152. In the production function , which symbol reflects the state of technology?
a.
A
b.
K
c.
H
d.
N
Scenario 25-1. An economy’s production form takes the form Y = AF(L, K, H, N).
153. Refer to Scenario 25-1. K represents the quantity of
a.
human capital only.
b.
physical capital only.
c.
human capital and physical capital combined.
d.
nonrenewable natural resources.
154. Refer to Scenario 25-1. In the production function, which of the following represents technology?
a.
A
b.
K
c.
H
d.
N
155. Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it can be rewritten
as
a.
Y/L = AF(1, K/L, H/L, N/L)
b.
Y/L = AF(L, 1, H/L, N/L)
c.
Y/L = AF(L, K/L, 1, N/L)
d.
Y/L = AF(L, K/L, H/L, 1)
156. Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then if we know the
values of A, K/L, H/L, and N/L, we also know the value of
a.
output.
b.
labor productivity.
c.
A.
d.
All of the above are correct.
157. Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it is possible that
the specific form of the production function is
a.
Y = 4L + 2K + 3H + N
b.
Y = (L + K + H + N)/4
c.
Y =2
d.
Y = 4
158. Which of the following statements is correct?
a.
Growth of productivity is the main determinant of growth in living standards.
b.
Common knowledge and proprietary technology are both important for the economy’s production of goods
and services.
c.
The terms capital and physical capital refer to the same thing.
d.
All of the above are correct.
159. Which of the following statements is correct?
a.
Human capital per worker is a determinant of productivity.
b.
A nation cannot be highly productive in producing goods and services without abundant quantities of natural
resources.
c.
Human capital and technological knowledge are the same thing.
d.
All technological knowledge is proprietary.
160. A basic principle of economics is that a country’s standard of living depends on its
a.
quantity of physical capital.
b.
abundance of natural resources.
c.
ability to produce goods and services.
d.
ability to thrive economically without having to interact with other countries.
161. In order for the standard of living within a country to be enhanced over time, which of the following is essential?
a.
The role of the country’s government in the economy must become larger.
b.
The population of the country must increase.
c.
More domestic natural resources must be discovered and used.
d.
The level of productivity must increase.
162. Sandra uses her sewing machine, thread, and yards of denim to produce jean skirts. The sewing machine is an
example of
a.
labor.
b.
physical capital.
c.
human capital.
d.
natural resources.
163. Greg learns how to bake from his grandmother. This is an example of
a.
b.
c.
d.
164. The production function for Country A exhibits constant returns to scale. Suppose that physical capital per worker,
human capital per worker, and natural resources per worker all triple. At the same time, Country A’s technological
knowledge doubles. Productivity
a.
does not change.
b.
is now two times larger.
c.
is now three times larger.
d.
is now six ties larger.