Question

1) Which of the following things would increase the value of Total Factor Productivity (TFP)?

Select one:

a. A new production method that can produce smaller, more efficient microchips.

b. None of the other answers.

c. A company hires a large amount of workers after building a brand new factory.

d. Foreign investors invest in physical capital.

2) The country of Rupertopia has one factory for all its workers in 2011 and 2012. There were 100 workers in 2011 and 150 workers in 2012. Additionally, there were 200 people living in Rupertopia in 2011 and 1,000 people in 2012. Real GDP was one million dollars in 2011 and two million dollars in 2012. Which of the following statements regarding labor productivity is true:

Select one:

a. Labor productivity in Rupertopia exhibits constant returns.

b. Labor productivity in Rupertopia exhibits increasing returns.

c. Labor productivity in Rupertopia exhibits diminishing returns.

d. More information is needed to determine whether labor productivity in Rupertopia exhibits di- minishing, constant, or increasing returns.

3) Which of the following changes would help to improve a country’s productivity level?

Select one:

a. Improvements in the health of workers

b. None of the other answers.

c. Tuition increases at local Universities

d. A lower birth rate

4) ”When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly.” This statement

Select one:

a. is an assertion that capital is subject to increasing returns.

b. is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant.

c. represents an unconventional view of the production process.

d. All of the other answers are correct.

5) Economic growth can be influenced by government policies. Which of the following can influence the economy’s growth rate?

Select one:

a. All of the other answers are correct

b. Promoting research and development of technologies

c. Fostering education

d. Maintaining property rights

Answer 1

1. A new production method that can produce smaller , more efficient microchips. This increase the value of TFP because increase in TFP is due to technological innovation and using new production production process that produces microchips efficeintly is like the technological innovation.

2. Labor productivity in Rupertopia exhibits increasing returns to scale because when there are 100 workers then , real GDP was one million dollars i.e in 2011. And when workers increases to 150 i.e less than double . Then real GDP get double i.e two million dollars in 2012. It impplies there is increasing return to scale by increment in number of workers less than the double amount output gets double.

3. Improvements in the health of workers would increase the productivity level in the country.

4. When workers already have a large quantity of capital to use in producing goods and servces, giving them an additional unit of capital increases their productivity only slightly. It is made under the assumption that the quantities of human capital, natural resources and technology are being held constant. Because increment in capital, increase the productivity only slightly when there is diminishing returns to that factor and this happens when human capital , and technology are constant.

5.All of the answers are correct.

5.