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15. Why do we refer to physical capital as a produced factor of production?
16. Is physical capital a produced factor of production? Is human capital a produced factor of
production?
17. Does a country have to be blessed with large quantities of natural resources in order to enjoy a
high standard of living? Briefly explain.
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18. Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the
general fact that differences in are responsible for some of the differences in standards of
living around the world.
19. Is coal a produced factor of production?
20. What term do we use to refer to the understanding of the best ways to produce goods and
services?
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21. Explain the distinction between technological knowledge and human capital.
22. What do we mean when we say that some technological knowledge is not proprietary?
23. “Market prices give no reason to believe that natural resources are a limit to economic growth.”
Explain this statement.
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24. If a production function has the property called , then doubling all inputs causes the
amount of output to double as well.
25. In the production function Y = A F ( L , K , H , N ) , Y represents the quantity of output; L
represents the quantity of labor; K represents the quantity of physical capital; and H represents the
quantity of human capital. What does N represent?
26. In the production function Y = A F ( L , K , H , N ) , Y represents the quantity of output; L
represents the quantity of labor; K represents the quantity of physical capital; and N represents
the quantity of natural resources. What does H represent?
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27. Consider the production function Y = 4 F ( L , K , H , N ) . Suppose F(10,8,6,5)= 100 and
F(30,24,18,15)=300. Does the production function have the property of constant returns to
scale? Why or why not?
28. Consider the production function Y = 2 F ( L , K , H , N ) . Suppose F(12,10,9,7)=100 and
F(24,20,18,14)=180. Does the production function have the property of constant returns to
scale? Why or why not?
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29. In what sense is capital accumulation costly to a society?
30. Because of , an increase in the saving rate leads to higher growth of income and
productivity only for a while.
31. What are the long–run effects on productivity and income of an increase in the saving rate?
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32. The people of Country X save 10 percent of their income, and the people of Country Y save 25
percent of their income. If these respective saving rates persist forever, will one country or the
other enjoy a higher rate of income growth forever? Explain.
33. How does the phenomenon of diminishing returns to capital explain the catch-up effect?
34. In recent decades, economic growth has been much more rapid in South Korea than in the United
States. What is the likely explanation for this fact?
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Figure 25-1
35. Refer to Figure 21-1. Does the figure represent the idea that the amount of capital per worker
influences the amount of output per worker, or does the figure represent the idea that the amount
of output per worker influences the amount of capital per worker?
36. Refer to Figure 21-1. In order for the figure to make sense, do we have to assume that capital
is the only determinant of output? Briefly explain.
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37. Refer to Figure 21–1. “When the amount of capital per worker increases by one unit, a poor
country experiences a greater benefit than does a rich country.” Does the figure illustrate this
notion? Briefly explain.
38. Refer to Figure 21-1. In what way is the figure relevant to the catch-up effect?
39. What is the distinction between foreign direct investment and foreign portfolio investment?
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40. What is the relationship between education and human capital?
41. Brazil gives cash payments to its poor citizens on the condition that those citizens’ children stay in
school. In terms of the determinants of productivity, how might this public policy contribute to
higher productivity in Brazil?
42. Studies have found that there is a relationship between height and productivity. Briefly explain.
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43. Research suggests that taller workers tend to earn more income than shorter workers. What does
this suggest about the relationship between workers’ height and their productivity?
44. An important prerequisite for the price system to work is an economy-wide respect for _______
rights.
45. What particularly important role do courts play in a market economy?
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46. What are inward-oriented policies? Do most economists recommend these types of policies to
poor countries?
47. When a country imposes tariffs, intending to protect domestic firms from foreign competition, it is
pursuing_______–oriented policies.
48. When a country eliminates tariffs and other trade restrictions, intending to promote economic
growth, it is pursuing_______–oriented policies.
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49. In what sense is it likely that geography has an effect on a country’s rate of economic growth?
50. Which well-known economist from the past asserted that “the power of population is infinitely
greater than the power in the earth to produce subsistence for man?”