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Multiple Choice Tutorial Chapter 3 Productivity and Growth. 1. Which of the following factors are most important to a country’s obtaining a high standard of living? a. It must have abundant land good for farming. b. It must have an abundant supply of raw materials.
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1. Which of the following factors are most important to a country’s obtaining a high standard of living? a. It must have abundant land good for farming. b. It must have an abundant supply of raw materials. c. It must have an educated workforce. d. It must encourage entrepreneurship and provide incentives to work, save, and to make a profit. d. A country can have abundant resources and an educated work force, but if it does not provide opportunities and give the proper incentives, it will not grow.
2. Rational households with limited resources attempt to maximize a. the amount of goods acquired b. the amount of services obtained c. marginal utility d. average utility e. total utility E. Households make individual decisions based on their marginal utility; in the process their total utility is maximized.
3. It takes 14 glassblowing machines, each operated by only one person, to produce 90% of all the glass bulbs used in the U.S. This is an example of how automation leads to a loss of jobs. • True • False b. In a micro sense this could be a true statement, but in a macro sense the statement is false because more machines leads to lower costs, lower costs lead to lower prices, lower prices leads to an increase in buying power, and this leads to more production and jobs.
4. The key to wealth building is to a. Borrow as much money as you can and make risky investments. b. Work and save a part of what you earn. c. Made wise investments with your savings. d. Both b and c. d. Wealth building is a two step process: save a part of your earnings and then learn how to make profitable investments with your savings.
5. Which of the following best describes Japan’s mistake in the 1990s? a. Marginal analysis b. Economies of scale c. Moral hazard d. The Pareto Effect c. Moral hazard is the consequence of the practice of the government supporting failing companies. The consequence is that there will be less incentive to make careful investments in the future if there is the belief that any losses will be paid for by the government.
6. Let's say that you are driving 65 mph in a 45 mph zone. A policeman stops you and gives you a ticket for driving 20 mph over the speed limit. This is an example of a. the rule of law b. the rule of man c. suffering the consequences d. paying the price of driving a. The rule of law. The law says that you can get a ticket for speeding, the ticket is in accordance to how the law is written
7. Let's say that you are driving 45 mph in a 45 mph zone. A policeman stops you and gives you a ticket for driving 20 mph over the speed limit in anticipation of a bribe. This is an example of a. the rule of law b. the rule of man c. negative intensions d. the rich get richer and the poorer get poorer b. The rule of man refers to a situation whereby whoever is in authority uses his authority to enrich himself. Sometimes this can be contrary to the rule of law.
8. In a business sense, productivity increases when the amount of output increases to a greater extent than does the amount of inputs. a. True b. False a. This is one definition of an increase in productivity. Another way to look at an increase in productivity is to produce more per unit of time at a lower per unit cost.
9. The assembly line technique of production can increase productivity by a. making better use of robotics. b. eliminating non-productive activity. c. enabling workers to become more efficient performing the same task over and over again. d. all of the above. d. Self explanatory.
10. Which of the following is an example of rent seeking? • cotton farmers pay money to politicians to influence legislation, such as raising tariffs against Brazilian cotton. • people looking for rental property seek available apartments in the newspaper. • landlords seek out the highest paying renters. • none of the above a. Rent seeking is the term used to describe the practice of special interest groups putting money into politicians pockets for the purpose of influencing legislation which will benefit their business.
