Exam 7: Production and Growth

For background, read the article "Fruit pickers: 'The money we earn is not worth getting out of bed for'" (http://goo.gl/MCQcC). This article apparently has very little to do with economic growth theories. However, it offers an excellent opportunity to better understand some important aspects of economic growth and development. Fruit picking is one area where technological progress is slow or nonexistent. For instance, strawberry-picking robots are still far from taking the jobs of the thousands of workers employed in the field. Suppose a worker is paid the minimum wage, which is, let's say $8 in the UK and $3 in Bulgaria. Suppose a worker in the UK is able to pick 10 kilos of strawberries in one hour, the same as a worker in Bulgaria. Suppose all strawberries picked in the UK and Bulgaria are exported to countries such as Norway, where they sell for $10 a kilo. a) Where does a fruit-picking worker have higher productivity, in the UK or in Bulgaria? Why are they paid different wages? b) British people complain that foreign immigrants "steal" their jobs. Why would a British worker not want to take such a job? Why would an employer in the UK wish to hire a Bulgarian worker instead of a British one? More generally, why do developed countries tend to "export" low-productivity jobs? Does this reduce the standards of living in the developed countries?

Kawartha Furniture uses 8 workers working 10 hours to produce 160 rocking chairs. What is the productivity of these workers?

Which statement best defines productivity?

Why are property rights important for the growth of a nation's standard of living?

Suppose Canadian-based Bombardier cannot keep up with international growth so it builds and operates a new factory in Mexico. What would be the result of the future production from such an investment?

What factor did economic historian Robert Fogel focus on as one determinant of long-run economic growth?

Last year, real GDP per person in Midlothian was $8000. The year before, it was $6000. What was the growth rate of real GDP per person?

The real GDP per capita in an economy increases at a rate of 2.6 percent. Calculate the number of years that it takes for real GDP to double. Assuming that the current GDP per capita is $40,000 and the growth rate will be on average 2.6 percent, how much will GDP per capita be after 10 years? After 20 years? After 30 years? Draw a graph to show approximately the evolution of this economy for the next 30 years.

Which statement illustrates an important fact about population growth?

Real GDP per person is $50,000 in Andromeda, $40,000 in Cosmos, $30,000 in Circinus, and $10,000 in Myall. Saving per person is $4000 in all four countries. Other things equal, what would we expect?

The productivity slowdown in 1973 appears to be primarily the result of a decrease in the capital to labour ratio.

Changes in the prices of most natural resources compared to other goods indicate that natural resources are generally becoming scarcer.

How is a nation's standard of living determined?

Last year, real GDP in Oceania was $620 billion and the population was 2.3 million. The year before, real GDP was $502 billion and the population was 2.0 million. What was the approximate growth rate of real GDP per person?

What best defines human capital?

Use the data below to find the growth of income per person (over the entire period, not an annual basis) between the two years listed. Year Real GDP Population 2000 $915,600 million 30 million 2020 $1,243,800 million 35 million

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Which statement best defines technological knowledge?

What do economists call the inputs used to produce goods and services?

According to Malthus's view, what is a consequence of increased population?