Bonus Quiz #5 Economic Issues 2D03 Thursday November 7, 2013
There are 16 True-False Questions. Read the questions carefully. If a part of a statement
is false, then the whole statement is false. Use scan sheet to circle A if the statement is
true (T) and circle B if the statement is false (F).
Answer Questions #1- 2 on the basis of the following production function in an
Y = L K , where Y is total output, L is labour and K is capital
We can re-write labour-productivity function as:
y = k , where y is the output per labour and k is the capital labour ratio.
1. If L increases by 2 percent and K increases by 4 percent, then Y increases by 3
2. If L increases by 2 percent and K increases by 4 percent, then labour productivity
increases by 1%.
3. Canada’s total factor productivity is less the total factor productivity in USA, but
Canada’s capital-productivity is higher than that in USA.
4. In comparison to USA, Canada’s innovation gap is manifested by lower R&D
5. In comparison to USA, Canada has higher human capital per labour.
6. Increasing returns to scale leading to larger economies of scale and highly
developed high-tech sector are hallmarks of Canada’s production function.
7. While USA ranks number one in