Econ 104 Chapter 8

The gross domestic product of Solvasa, a small island country, is U.S. $68 billion. The adult population of the country is 8.70 million and 11.3 million citizens are below 18 years of age. The output per capita of Solvasa is approximately equal to _____.

$3,400

Which of the following could cause the production possibilities frontier to shift to the right?

Production of more capital goods and fewer consumer goods

A(n) _____ implies an increase in human capital.

a more educated labor force

The production possibilities curve for capital and consumer goods is concave to the origin because:

resources are not perfectly adaptable to the production of both goods.

An increase in the quantity of capital per worker would:

result in a rightward movement along the current per-worker production function.

An economy's standard of living grows over the long run because of:

technological improvements.

The term "industrial policy" refers to:

the government policy that aims at enhancing the competitiveness of domestic firms.

Industrial market countries make up about _____ of the world population but produce more than _____ of the world's output.

16 percent; 50 percent

Which of the following factors pushes the per-worker production function of an economy downward?

A high risk of terror attack

If population increases, which of the following will be true?

GDP must increase if the same standard of living is to be maintained.

The law of diminishing marginal returns states that as the quantity of capital per worker increases, other things constant, output per worker eventually:

increases at a decreasing rate.

_____ is the resource whose productivity is most commonly measured.

Labor

Applied research:

is designed to answer particular questions.

Over the last century, U.S. labor productivity has:

grown at about 2 percent per year.

If increases in capital per worker lead to increased output per worker, but by decreasing amounts as capital increases, the per-worker production function _____.

has a decreasing slope

In the long run, changing technology on average has led to:

higher incomes and more leisure time.