Chapter 25 /Production and Growth ? 1703
25. In 2007, Modern Electronics, Inc. produced 60,000 calculators, employing 80 workers, each of whom worked
8 hours per day. In 2008, the same firm produced 76,500 calculators, employing 85 workers, each of whom worked 10 hours per day. Between 2007 and 2008, productivity at Modern Electronics a. decreased by 4.00 percent. b. remained constant.
c. increased by 8.33 percent. d. increased by 27.50 percent.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 3 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
26. Consider two countries. Country A has a population of 1,000, of whom 800 work 8 hours a day to make
128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.
a. Country A has higher productivity and higher real GDP per person than country B. b. Country A has lower productivity and lower real GDP per person than country B. c. Country A has higher productivity, but lower real GDP per person than country B. d. Country B has lower productivity, but higher real GDP per person than country B.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity | Real GDP
27. Workland has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final
goods. Laborland has a population of 5,000, of whom 4,000 work 12 hours a day to produce a total of 120,000 final goods.
a. Workland has higher productivity and higher real GDP per person than Laborland. b. Workland has higher productivity but lower real GDP per person than Laborland. c. Workland has lower productivity but higher real GDP per person than Laborland. d. Workland has lower productivity and lower real GDP per person than Laborland.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 3 REF: 25-2 LOC: Productivity and growth TOP:
Productivity | Real GDP
28. Country A has a population of 1,000, of whom 700 worked an average of 8 hours a day and had a productivity
of 2.5. Country B has a population of 800, of whom 560 worked 8 hours a day and had productivity of 3.0. The country with the higher real GDP was
a. country A, and the country with higher real GDP per person was country A. b. country A, and the country with higher real GDP per person was country B. c. country B, and the country with higher real GDP per person was country A. d. country B, and the country with higher real GDP per person was country B.
ANS: B
NAT: Analytic MSC: Analytical
DIF: 3 REF: 25-2 LOC: Productivity and growth TOP:
Productivity | Real GDP
29. Last year a country had 800 workers who worked an average of 8 hours and produced 12,800 units. This
year the country had 1000 workers who worked an average of 8 hours and produced 14,000 units. This country’s productivity was
a. higher this year than last year. A possible source of this change in productivity is a change in the
size of the capital stock.
b. higher this year than last year. A change in the size of the capital stock does not affect
productivity.
c. lower this year than last year. A possible source of this change in productivity is a change in the
size of the capital stock.
d. lower this year than last year. A change in the size of the capital stock does not affect
productivity.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 3 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
1704 ? Chapter 25 /Production and Growth
30. Which of the following statements is true?
a. Productivity is calculated as hours worked divided by output produced.
b. Americans have a higher standard of living than Indonesians because American workers are more
productive than Indonesian workers.
c. Trends in the market prices of most resources indicate that they have become increasingly scarce
over time.
d. All of the above are correct.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
31. Which of the following is not correct?
a. Countries that have had higher output growth per person have typically done so without higher
productivity growth.
b. A country's standard of living and its productivity are closely related. c. Productivity refers to output produced per hour of work.
d. Increases in productivity can be used to increase output or leisure.
ANS: A
NAT: Analytic MSC: Interpretive
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
32. Productivity is the
a. key determinant of living standards, and growth in productivity is the key determinant of growth in
living standards.
b. key determinant of living standards, but growth in productivity is not the key determinant of growth
in living standards.
c. not the key determinant of living standards, but growth in productivity is the key determinant of
growth in living standards.
d. not the key determinant of living standards, and growth in productivity is not the key determinant
of growth in living standards.
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: Productivity and growth TOP: Productivity | Standard of living MSC: Interpretive
33. Both Tom and Jerry work 10 hours a day. Tom can produce six baskets of goods per hour while Jerry can
produce four baskets of the same goods per hour. It follows that Tom's a. productivity is greater than Jerry's. b. output is greater than Jerry's.
c. standard of living is higher than Jerry's. d. All of the above are correct.
ANS: D DIF: 1 REF: 25-2 NAT: Analytic LOC: Productivity and growth TOP: Productivity | Standard of living MSC: Interpretive
34. Waldo works eight hours and produces 7 units of goods per hour. Emerson works six hours and produces 10
units of goods per hour.
a. Waldo’s productivity and output are greater than Emerson’s.
b. Waldo’s productivity is greater than Emerson’s but his output is less. c. Emerson’s productivity and output are greater than Waldo’s.
d. Emerson’s productivity is greater than Waldo’s but his output is less.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
Chapter 25 /Production and Growth ? 1705
35. In 8 hours, Sonja produces 8 units of goods and services. In 10 hours, Emma produces 9 units of goods and
services. It follows that
a. Sonja’s productivity is higher than Emma’s. b. Emma’s productivity is higher than Sonja’s.
c. Emma’s income per hour will be higher than Sonja’s. d. Sonja’s income per day will be higher than Emma’s.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
36. Mary looks over reports on four of her workers. Jack made 25 baskets in 5 hours. Walter made 36 baskets in 6
hours. Rudy made 40 baskets in 10 hours. Sam made 22 baskets in four hours. Who has the greatest productivity? a. Jack b. Walter c. Rudy d. Sam
ANS: B
NAT: Analytic MSC: Applicative
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
37. Real Foods produced 400,000 cans of diced tomatoes in 2007 and 460,000 cans of diced tomatoes in 2008.
They employed the same number of labor hours each year. Relative to their productivity in 2007, their productivity in 2008 was a. 6 percent lower. b. unchanged. c. 6 percent higher. d. 15 percent higher.
ANS: D
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
38. In 2007, Angel Foods produced 300,000 bags of tortilla chips, employing 12,000 hours of labor. In 2008,
Angel Foods produced 325,000 bags of tortilla chips, employing 13,000 hours of labor. Relative to their productivity in 2007, their productivity in 2008 a. decreased by 2.1 percent. b. was unchanged.
c. increased by 1.3 percent. d. increased by 2.3 percent.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
39. Dilbert’s Incorporated produced 5,000,000 units of accounting software in 2004. At the start of 2005 the
pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity a. fell by 4%. b. fell by 20%. c. rose by 12%. d. rose by 20%.
ANS: D
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
1706 ? Chapter 25 /Production and Growth
40. Dilbert’s Incorporated produced 6,000,000 units of software in 2005. At the start of 2006 the pointy-haired
boss raised employment from 10,000 total annual hours to 14,000 annual hours and production was 7,000,000 units. Based on these numbers what happened to productivity? a. It fell by about 16.7%. b. It stayed the same. c. It rose by about 16.7%. d. It rose by about 40%.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
41. The key determinant of a the standard of living in a country is
a. the amount of goods and services produced from each hour of a worker's time. b. the total amount of goods and services produced within the country. c. the total amount of its physical capital. d. its growth rate of real GDP.
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: Productivity and growth TOP: Standard of living | Productivity MSC: Interpretive42. 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.
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
43. The inputs used to produce goods and services are also called
a. productivity indicators. b. capitalization producers. c. production functions. d. factors of production.
ANS: D DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Factors of production MSC: Definitional
44. The Peapod Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of
physical capital?
a. the owner's knowledge of how to prepare vegetarian entrees
b. the money in the owner's account at the bank from which she borrowed money c. the tables and chairs in the restaurant d. the land the restaurant was built on
ANS: C DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
45. The equipment and structures available to produce goods and services are called
a. physical capital. b. human capital.
c. the production function. d. technology.
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
Chapter 25 /Production and Growth ? 1707
46. The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are
called
a. human capital. b. physical capital. c. natural resources.
d. technological knowledge.
ANS: B DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
47. Which of the following would not be considered physical capital?
a. a new factory building
b. a computer used to help Mercury Delivery Service keep track of its orders c. on-the-job training
d. a desk used in an accountant's office
ANS: C DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
48. Which of the following is physical capital?
a. the strength of workers b. the knowledge of workers
c. financial assets like cash and bonds d. the equipment in a factory
ANS: D DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
49. Which of the following would be considered physical capital?
a. the refrigerators at Uncle Bob’s restaurant b. rivers on which goods are transported c. the skills and knowledge of a lawyer d. All of the above are correct.
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
50. Which of the following terms do we use to mean the same thing as physical capital?
a. assembly line b. manual labor c. capital
d. factor of production
ANS: C DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Definitional
51. Human capital is the
a. knowledge and skills that workers acquire through education, training, and experience. b. stock of equipment and structures that is used to produce goods and services. c. total number of hours worked in an economy. d. same thing as technological knowledge.
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Human capital MSC: Definitional