ECON111 Week 3 Quiz

Which of the following variables have followed the so-called ‘hockey-stick’ trajectory—that is, little to no growth for most of human history followed by a sudden and sharp change to a positive growth rate?

• GDP per capita

• Labour productivity

• Within-country inequality

• Atmospheric CO₂ concentration

GDP per capita is not a perfect measure of welfare for which of the following reasons?

• It does not take into account environmental quality.

• It does not include firms' costs of production.

• Production in the home is given too much weight in its calculation.

• Its value is not related to the distribution of income.

With reference to the information in this table, which of the following statements is true?

• Greta has an absolute advantage in the production of apples only.

• Carlos has an absolute advantage in the production of both goods.

• Neither Carlos nor Greta have a comparative advantage in the production of either good.

• Carlos has a comparative advantage in producing apples.

Economics is best defined as

• the study of how people interact with each other and with their natural surroundings in producing their livelihoods, and how this changes over time.

• the study of how to make money in business.

• a tool of the neo-liberal hegemony which is utterly unrelated to anything that happens in the world.

• whatever it is that academic economists currently publish in journals.

Capitalist economies can fail to achieve superior economic performance if which of the following is true?

• Important markets are not competitive.

• Private property is not secure.

• Governments fail to invest sufficiently in essential goods and services, such as education.

• Firms are owned and managed by people who survive because of their connections to government or their privileged birth.

Which of the following statements are correct?

• In economics, a model is a simplified representation (diagrammatical or physical) that helps us to understand what is going on by focusing attention on what is important.

• Ceteris paribus is an assumption used in economic models where the important variables that you are focusing on are kept constant.

• An equilibrium is a self-perpetuating situation that does not change, even when a force for change is introduced from the outside that alters the basic data describing the situation.

• An economic rent is the benefit you receive above what you would have earned from your reservation option.

This diagram shows 5 technologies that use labour and energy (via coal) to produce the same output of cloth. From the diagram, what can we conclude?

• Technology D is more energy-intensive than technology C.

• Technology B dominates technology D.

• Technology A is the cost-minimizing technology at all prices of coal and wages.

• Technology C can sometimes be a cheaper technology than A.

This diagram shows isocosts for different combinations of labour and coal. Which of the following statements are true?

• P₁ and P₂ have the same cost.

• Q₁ and Q₂ have the same cost.

• Q₂ costs more than P₁.

• The relative price of coal is higher for Q₁ and Q₂ than it is for P₁ and P₂.

This diagram shows isocosts before (dotted) and after (solid) a relative change in the price of coal. A and B are technologies that produce identical output. Which of the following is true?

• Technology B is the optimal choice at the original relative price.

• Technology A is the optimal choice at either relative price.

• Technology A costs more than 50 at the new relative price.

• As the cost of technology B falls from 80 to 50 when the relative price changes, the optimal choice is to keep using B.

The term 'creative destruction' refers to

• the failure of producers of cultural goods to be able to survive without government support.

• the tendency of firms to deliberately build goods to break or wear out so that they can be replaced with updated models.

• the process by which old technologies and the firms that do not adapt are swept away by the new, because they cannot compete in the market.

• the impact of poorly designed competition policy.