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72. Megan is a landscaper. Which of the following are included in her physical capital?
a. her knowledge of landscaping learned in college and her landscaping equipment
b. her knowledge of landscaping learned in college, but not her landscaping equipment
c. her landscaping equipment, but not her knowledge of landscaping learned in college
d. neither her knowledge of landscaping learned in college nor her landscaping equipment
73. Ralph is a plumber. Which of the following are included in his human capital?
a. the knowledge he learned on the job, and the tools he uses
b. the knowledge he learned on the job, but not the tools he uses
c. the tools he uses, but not the knowledge he learned on the job
d. neither the knowledge he learned on the job nor the tools he uses
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74. Janet is a farmer. Which of the following are included in her human capital?
a. her tractor and what she’s learned from experience
b. her tractor but not what she’s learned from experience
c. what she’s learned from experience but not her tractor
d. neither her tractor nor what she’s learned from experience
75. Which of the following are human capital and physical capital, respectively?
a. for an accounting firm: the accountants’ knowledge of tax laws and computer software
b. for a grocery store: grocery carts and shelving
c. for a school: chalkboard and desks
d. for a library: the building and the reference librarians’ knowledge of the Internet
76. Which of the following are human capital and physical capital, respectively?
a. for a brick layer: her bricks and her tools
b. for a gas station: the pumps and the cash register
c. for a restaurant: the chefs’ knowledge about preparing food and the equipment in the kitchen
d. for a medical office: the building and the doctors’ knowledge of medicine
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77. Which of the following statements is correct?
a. By definition, all natural resources are nonrenewable.
b. Market prices give us reason to believe that natural resources are a limit to economic growth.
c. An economy must be blessed with ample quantities of natural resources if it is to be a highly
productive economy.
d. Differences in natural resources can explain some of the differences in standards of living
around the world.
78. The inputs into production of goods and services that are provided by nature, such as land, rivers,
and mineral deposits are called
a. physical capital.
b. natural resources.
c. human capital.
d. technological knowledge.
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79. Japan’s status as a rich nation is attributable to
a. Japan’s quantities of natural resources, but not to international trade.
b. international trade, but not to Japan’s domestic quantities of natural resources.
c. the fact that Japanese productivity has remained nearly constant for more than 100 years.
d. the fact that the Japanese have downplayed the role of human capital in economic growth.
80. Natural resources
a. are inputs provided by nature.
b. include land, rivers, and mineral deposits.
c. take two forms: renewable and nonrenewable.
d. All of the above are correct.
81. Which of the following is an example of a nonrenewable resource?
a. corn
b. oil
c. livestock
d. All of the above are correct.
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82. Which of the following is an example of a renewable natural resource?
a. fish
b. soybeans
c. wood
d. All of the above are correct.
83. Which of the following is an example of a renewable natural resource?
a. the knowledge possessed by scientists
b. carpenters’ labor services
c. lumber
d. All of the above are correct.
84. Which of the following is an example of a nonrenewable natural resource?
a. tin
b. petroleum
c. gold
d. All of the above are correct.
85. In a market economy, the real, or inflation-adjusted, price of a resource measures its
a. contribution to revenue.
b. relative scarcity.
c. productivity.
d. contribution to efficiency.
86. In a market economy, scarcity of resources is most clearly reflected in
a. supply.
b. demand.
c. market prices.
d. the stock of the resource.
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87. In a market economy, we know that a resource has become scarcer when
a. its price rises relative to other prices.
b. it is non–renewable and some of it is used.
c. people search for substitutes.
d. All of the above are correct.
88. In which of the following cases can we be certain that a natural resource has become scarcer?
a. both the demand for the resource and the supply of the resource have increased.
b. both the demand for the resource and the supply of the resource have decreased.
c. the demand for the resource has increased and the supply has decreased.
d. the demand for the resource has decreased and the supply has increased.
89. In which of the following cases can we be certain that a natural resource has become scarcer?
a. both the demand for the resource and the supply of the resource have increased
b. both the demand for the resource and the supply of the resource have decreased
c. demand for the resource is unchanged and the supply of the resource has increased
d. the demand for the resource has decreased and the supply of the resource is unchanged
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90. If the price of a good has risen over time,
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.
91. If a good has become more scarce, then we know for sure that
a. the demand for it increased.
b. the supply of it decreased.
c. either the demand for it increased or the supply of it decreased.
d. both the supply of it and the demand for it decreased.
92. Greater scarcity of a natural resource is indicated
a. by an increase in the price of the resource, whether the price increase is less than or greater
than the rate of inflation.
b. only by an increase in the price of the resource that is less than the rate of inflation.
c. only by an increase in the price of the resource that is greater than the rate of inflation.
d. only by an increase in the price of the resource that is caused by a decrease in supply and is
greater than the rate of inflation.
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93. Suppose that in some country the price of silver increased from $30 per ounce to $31 per ounce
during a time when the overall price level increased by 5 percent. During this period, the real price
of silver
a. increased.
b. decreased.
c. stayed the same.
d. might have increased, decreased or stayed the same; more information is needed to be sure.
94. Suppose over the last five years that the price of recycled aluminum increased from $800 a ton to
$900 a ton. Over the same time a measure of the overall price level increased from 120 to 138.
The real price of recycled aluminum
a. increased, so it became scarcer
b. increased, so it became less scarce
c. decreased, so it became scarcer
d. decreased, so it became less scarce
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95. Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,275 a ton.
Over the same time a measure of the overall price level increased from 150 to 156. The price of
iron ore increased by
a. less than inflation, so it became less scarce.
b. less than inflation, so it became more scarce.
c. more than inflation, so it became more scarce.
d. more than inflation, so it became less scarce.
96. Suppose that over the last year the price of copper increased from $1.70 a pound to $1.79 per
pound. Over the same time a measure of the overall price level increased from 300 to 309. The
price of copper increased by
a. less than inflation, and this means it became relatively less scarce.
b. less than inflation, and this means it became scarcer.
c. more than inflation, and this means it became scarcer.
d. more than inflation, but this doesn’t necessarily mean that it become scarcer.
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97. If an inexpensive alternative to oil were found, the price of oil adjusted for inflation
a. would decline as the alternative would reduce the demand for oil.
b. would decline as the alternative would reduce the supply of oil.
c. would increase as the alternative would increase the demand for oil.
d. would increase as the alternative would increase the supply of oil.
98. Historically, the market prices of most natural resources (adjusted for inflation) have
a. increased.
b. remained stable.
c. remained stable or decreased.
d. decreased.
99. The behavior of market prices over time indicates that natural resources are
a. a limit to economic growth.
b. unrelated to economic growth.
c. not a limit to economic growth.
d. the major determinant of productivity.
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100. The notion that our ability to conserve natural resources is growing more rapidly than their
supplies are dwindling is supported by the fact that
a. most economists do not regard the availability of natural resources as a determinant of
productivity.
b. the quantity of natural resources does not enter into any production function.
c. inflation–adjusted prices of most natural resources have been stable or fallen over time.
d. inflation-adjusted prices of most natural resources have risen over time.
101. Which of the following is correct?
a. Once adjustment is made for inflation, the prices of most natural resources have been about
steady or falling.
b. Technological progress has allowed us to substitute renewable resources for some
nonrenewable resources.
c. Technological progress has made once-crucial natural resources less necessary.
d. All of the above are correct.
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102. After adjusting for inflation, over time the prices of most natural resources have been
a. steady or falling, meaning that our ability to conserve them is growing more rapidly than their
supplies are dwindling.
b. steady or falling, meaning that their supplies are dwindling more rapidly than our ability to
conserve them is growing.
c. rising, meaning that our ability to conserve them is growing more rapidly than their supplies are
dwindling.
d. rising, meaning that their supplies are dwindling more rapidly than our ability to conserve them
is growing.
103. If natural resources had become scarcer, then we would expect their
a. prices to have risen more than inflation as they have.
b. prices to have risen more than inflation, but they have not.
c. known quantities to have fallen as they have.
d. known quantities to have fallen but they have not.
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104. A leading environmental group recently published a report contending that humans are running a
“resource deficit” because we are using natural resources faster than they can be regenerated.
The group claims that this means that economic growth will eventually stop, and will even be
reversed. An economist would
a. agree with the report, and would point to rising natural resource prices as evidence.
b. agree with the report, but wouldn’t think it was important because growth will not slow down
for several centuries.
c. disagree with the report, in part because it ignores the mitigating effects of technological
change.
d. disagree with the report because labor and capital are the primary determinants of growth,
and since they are plentiful, growth will not slow down.
105. Despite its status as one of the richest countries in the world, Japan
a. has a very low level of productivity.
b. has few natural resources.
c. has very little human capital.
d. engages in a relatively small amount of international trade.
106. Which of the following best states economists’ understanding of the facts concerning the
relationship between natural resources and economic growth?
a. A country with no or few domestic natural resources is destined to be poor.
b. Differences in natural resources have virtually no role in explaining differences in standards of
living.
c. Some countries can be rich mostly because of their natural resources and countries without
natural resources need not be poor, but can never have very high standards of living.
d. Abundant domestic natural resources may help make a country rich, but even countries with
few natural resources can have high standards of living.
107. An understanding of the best ways to produce goods and services is called
a. human capital.
b. physical capital.
c. technology.
d. productivity.
108. Technological knowledge refers to
a. human capital.
b. available information on how to produce things.
c. resources expended transmitting society’s understanding to the labor force.
d. All of the above are technological knowledge.
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109. Technological knowledge
a. is the same thing as human capital.
b. can be discovered but it can never be kept secret.
c. is a determinant of productivity.
d. does not play a role in the relationship that economists call the production function.
110. Proprietary technology is knowledge that is
a. known but no longer used much.
b. known, but only recently discovered.
c. known mostly by only those in a certain profession.
d. known only by the company that discovered it.
111. Proprietary technology is technology that is
a. widely used because it is easy to learn.
b. widely used because the government subsidizes its use.
c. not widely used because people could, but have not, taken the time to learn how to apply it.
d. not widely used because it is known or controlled only by the company that discovered it.
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112. Proprietary technology is technology
a. that the government prohibits firms from using.
b. conserves natural resources.
c. that is useful while other types of technology are outdated.
d. that is known or controlled only by the company that discovered it.
113. Human capital is
a. the same thing as technological knowledge.
b. the same thing as labor.
c. the tools and equipment operated by humans.
d. knowledge and skills that workers have acquired.
114. Human capital
a. can be thought of, metaphorically, as the quality of society’s textbooks, whereas technological
knowledge
can be thought of as the time that the population has devoted to reading textbooks.
b. is more tangible than physical capital.
c. is an input in the production of goods and services.
d. is the same as the quantity of labor.
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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. both technological knowledge and human capital.
b. technological knowledge but not human capital.
c. human capital but not technological knowledge.
d. neither technological knowledge nor human capital.
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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.
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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.