Other Economics Answers

What is the reason for increasing opportunity costs? Why do the production frontiers of different nations have different shapes? 

Why does a production frontier that is concave from the origin indicate increasing opportunity costs in both commodities? What does the slope of the production frontier measure? How does the slope

change as the nation produces more of the commodity measured along the horizontal axis? more of the commodity measured along the vertical axis? 

Suppose you are a monopolist and find that the demand elasticity of your

product is different in two markets. What would be your pricing strategy?

4. Suppose that in Case B in Table 2.5 the United

States exchanges 4W for 4C with the United

Kingdom.

(a) How much does the United States gain in

terms of cloth?

(b) How much does the United Kingdom gain in

terms of cloth?

(c) What is the range for mutually beneficial

trade?

(d) How much would each nation gain if they

exchanged 4W for 6C instead?

Choose the best answer to each

question.

Consider a Solow growth model with the

following production function:

Y-FiX.L) - K0.3 (AL) 0.7

(1) If A = 2, L= 20.000, and K = 400, what is output?

(2) Does this production function have constant

returns to scale? Explain.

(3) Suppose the labor force grows by 5% so that it is

now 21.000. By how

much does output increase?

(4) Starting again with the conditions in part (1),

what if capital increases by

5%, so that it is now 420. By how much does

output increase?

For each pair listed below, i) explain the meaning

and significance of both terms, and il) briefly

explain the relationship between the two terms.

(1) the center; the periphery

(2) steady state, Golden-rule steady state

(3) convergence; conditional convergence

(4) TP; growth accounting equation

Discuss some limitations of the following three

models

(1) the Lewis model

(2) Dependency theory

(3) Slow model

Chose the best answer to each question

The market-friendly approach to development

emphasizes

(a) self-interested behavior of public officials in

LDCs.

(b) the dependence of LDCs on former colonial

powers.

(c) the inherent efficiency of markets in developing

countries.

(d) that markets in LDCs fail sometimes and non-

selective interventions can

promote economic development.

For an economy's output function »- {k)-VE

where y=(Y/L) and k = (K/L), which of the following

statements is correct?

(a) In this economy, the average productivity of

capital is constant for all k.

(b) The output function is subject to constant returns

to scale.

(c) In this economy, labor and capital are not

substitutable.

(d) The economy's total factor productivity is equal to

O.

In a steady-state economy with no population

growth, capital per worker is 80, the saving rate is

25 percent, and the depreciation rate is 12.5

percent. The level of output per worker is

(a) 195

(b) 38

(c) 40

(d) 47

Choose the best answer to each question

The underlying assumption of the Harrod-Domar

growth model is that

(a) growth potential is affected by employment of

labor input relative to

capital.

(b) growth is mainly determined by capital

accumulation.

(c) growth can be sustained only if agricultural

productivity rises.

(d) developing countries save too much and invest

too little.

The diagram on the y

right represents

the

Harrod-Domar

production

functions for Countries

A and B.

Which of the following correctly

compares the two countries?

(a) Capital is subject to the law of

diminishing returns in both

countries.

(b) Country A has lower ICOR than

Country B.

(c) Country A has lower capital productivity

than Country B.

(d) If the saving rate is the same in the two

countries, then Country B will have a higher

output growth rate.

.

Choose the best answer to each

question.

Consider a country with an ICOR of 8.0 in which

GDP rises by 4% per annum to prevent a decline

in per-capita income. This requires a saving rate of

(a) 12%

(6) 32%

(c) 28%

(d) 2%

On which of the following does the

neoclassical counter-revolution school most blame

underdevelopment?

(a) misquided government policies (b) relatively

rigid cultural traditions

(c) the legacy of colonialism

(d) unfair trade practices on the part of developed

countries

In the public choice (or new political economy)

approach to development the emphasis is on

(a) growth in the rural sector.

(b) the self-interested behavior of public officials

(c) the dependence of LDCs on former colonial

powers.

(d) the inherent efficiency of developing country

markets.

Dependency theory suggests that countries should become more inward-looking and less entangled with developed countries, trading only with

 other developing countries. True/False

If the production function is given as Y = L∙K, then it follows constant returns to scale. True/False

When the output stays the same after the use of each input has been doubled, then the economy’s production function follows a constant returns to scale. True/False

While capital dilution lowers the value of k, capital widening raises the value of k in the Solow model. True/False

At the steady state, the economy’s growth rate is always equal to zero. True/False

In the Solow model with technological progress, the growth rate of GDP is the same as the population growth rate and the savings rate. True/False