Question

a. If increases in capital per worker lead to increased output per worker, but at a diminishing rate, the per-worker production function _____.​

a	is horizontal​
b	has an upward slope at an increasing rate​
c	has an upward slope but at a diminishing rate​
d	has a downward slope at a diminishing rate​
e	​has downward slope but at an increasing rate

b. In poorer or "developing" countries there tends to be

a	Plentiful & cheap land but very little labor, so land is substituted for labor.
b	about the same resources as developed nations.
c	Plentiful & cheap entrepreneurship but very capital, so entrepreneurship is substituted for capital.
d	Plentiful & cheap capital, but very little labor, so capital is substituted for labor.
e	Plentiful & cheap labor but very little captial, so labor is substituted for capital.

c. All of the following are reasons for the low standard-of- living in "developing" countries, except which one?​

a	Low tax rates​
b	​Very low captial per worker
c	Low levels of physical capital
d	Low labor productity rates
e	Low human capital

d. If a nation's population increases, which of the following is true?​

a	their output per capita will rise​
b	their real GDP must also increase to maintain their standard of living.​
c	​their real GDP will increase.
d	Overall demand will increase, but per capita aggregate demand will remain constant.

e. The critics of industrial policy believe that​

a	Industrial policy overprotects the domestic producers.​
b	Industrial policy gives domestic industries a competitive advantage over important trading partners.​
c	Industrial policy encourages unfavorable terms of trade with foreign countries.​
d	​The government allocates scarce resources more efficiently than markets.
e	Industrial policy can be corrupt and benefit those with political connections.

Answer 1

a. c. has an upward slope but at a diminishing rate
(As output is increasing so production function has an upward slope but at a diminishing rate.)

b. e. Plentiful & cheap labor but very little captial, so labor is substituted for capital
(There is abundance of labor.)

c. a. Low tax rates
(This is not a reason for low standard of living.)

d. e. Overall demand will increase, but per capita aggregate demand will remain constant.
(With increase in population, demand will increase. But AD/population ratio will remain constant.)

e. a. Industrial policy overprotects the domestic producers.
(Critiques believes that industrial policies overprotects domestic producers.)