Economics 4 Quiz 23.24

A production function...

• a. indicates the maximum output from a given set of inputs when used efficiently.
• b. indicates how efficient resources are when used in the production process.
• c. identifies the profit maximizing amount of output.
• d. identifies the profit maximizing amounts of inputs.
• e. indicates the relationship between the price of a good or service and the quantity supplied.

Solow concluded that most of the growth in GDP per capita across time was due to which phenomenon?

• a. changes in L (the labor)
• b. changes in K (the capital)
• c. changes in A (the multiplier in the production function)
• d. Y (total output) underwent a substantial increase.
• e. GDP per capita (Y/L) was much larger than originally expected.

Consider steel production in the early 1800s. Which of the following is TRUE?

• a. Bessemer’s production method blasted chemicals used to produce steel with hot air.
• b. Bessemer’s production method reduced production time from weeks to about 20 minutes.
• c. Bessemer’s production method reduced the amount of crushed limestone needed to produce a unit of steel.
• d. Bessemer discovered the optimum level of carbon to make top-grade steel.
• e. All of the above statements are true.

Which of the following describes the path of development for the First Industrial Revolution?

• a. Began in the U.S., spread to France, Germany, and the UK, and then to the rest of the world.
• b. Began in the UK, and then spread to France, Germany, and the U.S.
• c. Began in France, spread to the UK, Germany, and the U.S., and then to the rest of the world.
• d. Began in Germany, spread to the UK, France, and the U.S., and then to the rest of the world.
• e. Began simultaneously in the UK, U.S., Germany, and France, and then spread to the rest of the world.

Which of the following breakdowns of the percentage of spending on research and development in the United States is correct?

• a. Private business 50%; Federal government spending 25%; state, local government and non-profits 25%.
• b. Private business 35%; Federal government spending 47%; state, local government and non-profits 18%.
• c. Private business 27%; Federal government spending 62%; state, local government and non-profits 11%.
• d. Private business 15%; Federal government spending 76%; state, local government and non-profits 9%.
• e. Private business 73%; Federal government spending 20%; state, local government and non-profits 7%.

Based on Graph B below, an excess demand is represented by the difference between the points:

• a. AB
• b. BC
• c. CG
• d. FB
• e. GA

Which of the following is NOT one of the main ways firms try to appropriate the value of their innovation?

• a. Intellectual property
• b. Counterfeiting research
• c. Secrecy
• d. Complementary assets
• e. Lead time

Which of the following statements is correct?

• a. Market size and profit from an innovation are inversely related.
• b. More barriers to international trade spur more domestic innovation.
• c. Research on disease is positively related to the number of infections.
• d. The amount of research and development undertaken is positively related to market size.
• e. History shows that there were more innovations in the pre-industrial age than in the current age.

Creative destruction refers to:

• a. the critical thinking that takes place during the innovation process
• b. the process through which old technology is replaced by new technology
• c. the destruction of livelihoods by economics development
• d. how resources are used up in the production process
• e. destructive unemployment

A new law is enacted in order to reduce pollution produced by motor vehicles. This law increases the taxes on gasoline, but returns each dollar taxed to the drivers at the end of the fiscal year. As a result, drivers are driving fewer miles. What is the appropriate response from a driver that is familiar with economic principles?

• a. Drivers should drive less.
• b. Drivers should drive more.
• c. Drivers should upgrade to more electric vehicles.
• d. Drivers should continue to behave as if the tax was not in place.
• e. Drivers should substitute towards mass transportation options.