# Ultimate Quiz On Computer Industry

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• 1.

### 1. Assume that the housekeeping is a perfectly competitive global industry. A housekeeper from the Philippines is contemplating immigrating to Singapore in search of higher wages. Suppose that the housekeeper earns approximately \$2,000 annually and expects to find a job in Singapore worth approximately \$5,000 annually for a period of 3 years. Furthermore, assume that the cost of living in Singapore is \$500 more per year than at home. 1) What can we say about the productivity of housekeepers in Singapore versus the Philippines?

• A.

MPL in Singapore = MPL in Philippines

• B.

MPL in Singapore > MPL in Philippines

• C.

MPL in Singapore < MPL in Philippines

• D.

MPL may be >, =, < MPL in Philippines depending on productivity, which we donâ€™t know

• E.

B. MPL in Singapore > MPL in Philippines
Explanation
The correct answer suggests that the productivity of housekeepers in Singapore is higher than in the Philippines. This can be inferred because the housekeeper expects to earn a higher wage in Singapore compared to their current earnings in the Philippines. Higher wages usually indicate higher productivity levels. However, it is important to note that this answer assumes that all other factors, such as working conditions and job opportunities, are equal between the two countries.

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• 2.

### Assume that the housekeeping is a perfectly competitive global industry. A housekeeper from the Philippines is contemplating immigrating to Singapore in search of higher wages. Suppose that the housekeeper earns approximately \$2,000 annually and expects to find a job in Singapore worth approximately \$5,000 annually for a period of 3 years. Furthermore, assume that the cost of living in Singapore is \$500 more per year than at home. 2. What is the total gain to the housekeeper from migrating?

• A.

\$11,500

• B.

\$1,500

• C.

We need to know their productivities and thus MPL to determine the differences in benefits

• D.

\$2,500

• E.

\$3,000

D. \$2,500
Explanation
The total gain to the housekeeper from migrating is \$2,500. This can be calculated by subtracting the cost of living in Singapore (\$500 more per year) from the expected annual wage in Singapore (\$5,000), and then multiplying that by the 3-year period. Therefore, the total gain is (\$5,000 - \$500) * 3 = \$14,500. However, since the housekeeper currently earns \$2,000 annually, we need to subtract that from the total gain to get the net gain. Therefore, the net gain is \$14,500 - \$2,000 = \$12,500. However, since the question only asks for the total gain, the correct answer is \$2,500.

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• 3.

### China has 1,000 units of capital and 3,000 workers; (2) the United States has 3,000 units of capital and 1,000 workers; (3) clothing production is labor intensive; and (4) chemical production is capital intensive. When trade occurs between China and the United States, what will happen to Chinese capital/labor ratios in clothing and chemicals?

• A.

Both will rise.

• B.

Both will fall.

• C.

The capital/labor ratio in Chinese clothing production will rise, and the capital/labor ratio in Chinese chemical production will fall.

• D.

The capital/labor ratio in Chinese chemical production will rise, and the capital/labor ratio in Chinese clothing production will fall

• E.

None of the above.

B. Both will fall.
Explanation
When trade occurs between China and the United States, the capital/labor ratio in Chinese clothing production will fall because China has a comparative advantage in labor-intensive clothing production. As a result, China will allocate more resources towards clothing production, reducing the capital/labor ratio in this sector. Similarly, the capital/labor ratio in Chinese chemical production will also fall as China imports capital-intensive chemicals from the United States, reducing the need for domestic production. Therefore, both capital/labor ratios in clothing and chemicals will fall.

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• 4.

### China has 1,000 units of capital and 3,000 workers; (2) the United States has 3,000 units of capital and 1,000 workers; (3) clothing production is labor intensive; and (4) chemical production is capital intensive. Suppose that the United States eliminates all restrictions on immigration and Chinese workers are free to emigrate from China to the United States. How many Chinese workers must emigrate from China to the United States in order for factor price equalization to occur?

• A.

1,000

• B.

2,000

• C.

3,000

• D.

4,000

• E.

None of the above

B. 2,000
Explanation
In order for factor price equalization to occur, the factor prices (wages and returns on capital) in both countries must become equal. Since clothing production is labor-intensive and China has a higher labor-to-capital ratio, Chinese workers would have a comparative advantage in clothing production. Therefore, Chinese workers would emigrate to the United States until the wage rate in the United States decreases and the return on capital increases, making factor prices equal between the two countries. Since China has 3,000 workers and the United States has 1,000 workers, 2,000 Chinese workers must emigrate for factor price equalization to occur.

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• 5.

### Suppose that Nomansland and Somemansland are two countries that produce goods A and B using labor and capital. Total production in Nomansland is 100 units of good A, which is produced using one unit of labor and one unit of capital and 150 units of good B, which is produced using 1 unit of labor and 5 units of capital. Somemansland on the other hand produces 200 units of good A using 3 unit of labor and 1 unit of capital and 150 units of good B using 1 unit of labor and 2 units of capital. What is the amount of capital and labor available in the country?

• A.

Nomansland: 850 and 250 Nomansland: 500 and 700

• B.

Somemansland: 750 and 200 Somemansland: 700 and 300

• C.

Nomansland: 850 and 250 Somemansland: 500 and 700

• D.

Nomansland: 200 and 850 Somemansland: 400 and 500

• E.

Nomansland: 800 and 200 Somemansland: 700 and 500

C. Nomansland: 850 and 250 Somemansland: 500 and 700
Explanation
The correct answer is Nomansland: 850 and 250 Somemansland: 500 and 700. This answer is derived from the information provided in the question about the production of goods A and B in both countries. In Nomansland, 100 units of good A are produced using one unit of labor and one unit of capital, and 150 units of good B are produced using one unit of labor and five units of capital. Therefore, the total labor available in Nomansland is 100 units and the total capital available is 250 units. In Somemansland, 200 units of good A are produced using three units of labor and one unit of capital, and 150 units of good B are produced using one unit of labor and two units of capital. Therefore, the total labor available in Somemansland is 500 units and the total capital available is 700 units.

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• 6.

### Given the information in nomansland and somemansland, how will capital and labor flow between the two countries?

• A.

Some workers and FDI will flow from nomansland to somemansland while only FDI will flow from somemansland to nomansland.

• B.

Workers will migrate from somemansland to nomansland while FDI will flow from nomansland to somemansland

• C.

Workers will migrate from nomansland to somemansland while FDI will flow from somenansland to nomansland

• D.

Workers will migrate from nomansland to somemansland while some workers and FDI flow from somemansland to nomansland

• E.

None of the above

B. Workers will migrate from somemansland to nomansland while FDI will flow from nomansland to somemansland
Explanation
According to the given information, workers will migrate from somemansland to nomansland, indicating a flow of labor from somemansland to nomansland. Additionally, it is stated that only FDI will flow from somemansland to nomansland, suggesting that capital will flow in the opposite direction, from nomansland to somemansland. Therefore, the correct answer is "workers will migrate from somemansland to nomansland while FDI will flow from nomansland to somemansland."

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• 7.

### Given the information on nomansland and somemansland, What will happen when trade occurs between the two countries?

• A.

In the long run, the amount of good A increases in nomansland and the amount of good B increases in nomansland country while the amount of good A increases in somemansland country and the amount of good B increases in somemansland.

• B.

In the long run, the amount of good A increases in nomansland and the amount of good B decreases in nomansland while the amount of good A decreases in somemansland nd the amount of good B increase in somemansland

• C.

In the long run, the amount of good A decreases in nomansland and the amount of good B increases in nomansland while the amount of good A increases in somemansland and the amount of good B decreases in somemansland

• D.

In the long run, the amount of good A increases in nomansland and the amount of good B decrease in nomansland while the amount of good A decrease in somemansland and the amount of good B decreases in somemansland

• E.

None of the above

A. In the long run, the amount of good A increases in nomansland and the amount of good B increases in nomansland country while the amount of good A increases in somemansland country and the amount of good B increases in somemansland.
Explanation
When trade occurs between nomansland and somemansland, both countries experience an increase in the amount of good A and good B in the long run. This suggests that trade is beneficial for both countries, leading to an expansion of their respective production capacities and an increase in the availability of both goods.

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• 8.

### Given the information on nomansland and somemansland, in the short-run, when trade occurs between the two countries, we can expect that the relationship between wage and labor is as follows:

• A.

In Nomansland, the MPLA (marginal product of labor for good A) will increase and the W (wage rate) will increase while in Somemansland the MPLA will decrease while the wage rate will increase

• B.

In Nomansland, the MPLA (marginal product of labor for good A) will increase and the W (wage rate) will decrease while in Somemansland the MPLA will decrease while the wage rate will increase

• C.

In Nomansland, the MPLB (marginal product of labor for good B) will increase and the W (wage rate) will decrease while in Somemansland the MPLB will decrease while the wage rate will decrease.

• D.

In Nomansland, the MPLB (marginal product of labor for good B) will increase and the W (wage rate) will increase while in Somemansland the MPLB will decrease while the wage rate will increase

• E.

None of the above

E. None of the above
Explanation
The given answer options do not accurately describe the relationship between wage and labor in either Nomansland or Somemansland. The correct answer is "None of the above" because the information provided is not sufficient to determine the relationship between wage and labor in either country.

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• 9.

### Given the information on nomansland and somemansland, in the short-run, when trade occurs between the two countries, we can expect that the relationship between wage and capital is as follows:

• A.

In Nomansland, the MPKA (marginal product of capital for good A) will increase and the W (wage rate) will increase while in Somemansland the MPKA will decrease while the wage rate will increase

• B.

In Nomansland, the MPKA (marginal product of capital for good A) will increase and the W (wage rate) will decrease while in Somemansland the MPKA will decrease while the wage rate will increase.

• C.

In Nomansland, the MPKB (marginal product of capital for good B) will increase and the W (wage rate) will decrease while in Somemansland the MPKA will decrease while the wage rate will increase

• D.

In Nomansland, the MPKA (marginal product of capital for good B) will increase and the W (wage rate) will increase while in Somemansland the MPKB will decrease while the wage rate will increase

• E.

None of the above

B. In Nomansland, the MPKA (marginal product of capital for good A) will increase and the W (wage rate) will decrease while in Somemansland the MPKA will decrease while the wage rate will increase.
Explanation
In Nomansland, the MPKA (marginal product of capital for good A) will increase and the W (wage rate) will decrease because trade will lead to increased specialization and efficiency, resulting in higher productivity and lower wages. In Somemansland, the MPKA will decrease while the wage rate will increase because trade will lead to increased competition and a decrease in the marginal productivity of capital, while wages will rise due to increased demand for labor.

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• 10.

### Given the information on nomansland and somemansland, in the short-run, when trade occurs between the two countries, which interest groups will encourage trade between the two countries?

• A.

In Nomansland and Somemansland, land owners and capital owners support a law that encourages free movement of factors of production (immigration and FDI) while the Labor Unions oppose such a law

• B.

In Somemansland land owners and capital owners support a law that encourages free movement of factors of production (immigration and FDI) while the Labor Unions oppose such a law.

• C.

In Nomansland land owners and capital owners oppose a law that encourage free movement of factors of production (immigration and FDI) while the labor Unions support such a law.

• D.

None of the groups care and thus it does not matter

B. In Somemansland land owners and capital owners support a law that encourages free movement of factors of production (immigration and FDI) while the Labor Unions oppose such a law.
Explanation
In Somemansland, land owners and capital owners support a law that encourages free movement of factors of production (immigration and FDI) while the Labor Unions oppose such a law. This means that the interest groups that would encourage trade between the two countries are the land owners and capital owners, as they believe that the free movement of factors of production would benefit them. On the other hand, the Labor Unions oppose such a law because they may see it as a threat to their job security or wages.

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• 11.

### Suppose that the computer industry use 2 units of capital for each worker while the shoe industry use 0.5 units of capital for each worker and there are 100 workers and 100 units of capital in the economy. How much capital and labor are used in each industry?

• A.

There are about 75 workers in the shoe industry and about 25 workers in the computer industry while there are 25 units of capital in the shoe industry and 75 units of capital in the computer industry

• B.

There are about 67 workers in the shoe industry and about 33 workers in the computer industry while there are 33 units of capital in the shoe industry and 67 units of capital in the computer industry

• C.

There are about 70 workers in the shoe industry and about 30 workers in the computer industry while there are 30 units of capital in the shoe industry and 70 units of capital in the computer industry

• D.

There are about 60 workers in the shoe and industry and about 40 workers in the computer industry while there are 40 units of capital in the shoe industry and 60 units of capital in the computer industry

• E.

There are about 55 workers in the shoe and industry and about 45 workers in the computer industry while there are 45 units of capital in the shoe industry and 55 units of capital in the computer industry

B. There are about 67 workers in the shoe industry and about 33 workers in the computer industry while there are 33 units of capital in the shoe industry and 67 units of capital in the computer industry
Explanation
Based on the given information, the computer industry uses 2 units of capital for each worker, while the shoe industry uses 0.5 units of capital for each worker. Since there are 100 workers in total, the shoe industry would require 0.5 units of capital for each worker multiplied by the number of workers, which is approximately 67 units of capital. Similarly, the computer industry would require 2 units of capital for each worker multiplied by the number of workers, which is approximately 33 units of capital. Therefore, the explanation for the given answer is that there are about 67 workers in the shoe industry and about 33 workers in the computer industry, while there are 33 units of capital in the shoe industry and 67 units of capital in the computer industry.

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• 12.

### Suppose that the computer industry use 2 units of capital for each worker while the shoe industry uses 0.5 units of capital for each worker. Initially, there were 100 workers and 100 units of capital in the economy. If the number of workers increases to 125 due to immigration but the capital did not change, what is the amount of labor and capital used in each industry?

• A.

There are about 100 workers in the shoe industry and about 25 workers in the computer industry while there are 50 units of capital in the shoe industry and 50 units of capital in the computer industry

• B.

There are about 75 workers in the shoe industry and about 50 workers in the computer industry while there are 25 units of capital in the shoe industry and 75 units of capital in the computer industry

• C.

There are about 75 workers in the shoe industry and about 50 workers in the computer industry while there are 40 units of capital in the shoe industry and 60 units of capital in the computer industry

• D.

There are about 90 workers in the shoe and industry and about 35 workers in the computer industry while there are 25 units of capital in the shoe industry and 75 units of capital in the computer industry

• E.

None of the above

A. There are about 100 workers in the shoe industry and about 25 workers in the computer industry while there are 50 units of capital in the shoe industry and 50 units of capital in the computer industry
Explanation
Since the computer industry uses 2 units of capital for each worker and the shoe industry uses 0.5 units of capital for each worker, we can calculate the amount of capital used in each industry by multiplying the number of workers by the capital per worker ratio. In the shoe industry, there are 100 workers, so the capital used is 100 workers * 0.5 units of capital per worker = 50 units of capital. In the computer industry, there are 25 workers, so the capital used is 25 workers * 2 units of capital per worker = 50 units of capital. Therefore, there are about 100 workers in the shoe industry and about 25 workers in the computer industry, while there are 50 units of capital in each industry.

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• 13.

### Suppose that the computer industry use 2 units of capital for each worker while the shoe industry uses 0.5 units of capital for each worker. Initially, there were 100 workers and 100 units of capital in the economy. If the number of workers increases to 125 due to immigration but the capital did not change, how will the amount of resources used in each industry change?

• A.

The amount of labor and capital will increase in the shoe industry while the amount of labor and capital will decrease in the computer industry

• B.

The wage will fall, the amount of labor will increase in the shoe and computer industries while the amount of capital is unchanged in both industries.

• C.

The wage rate to rise and some labor will flow into the computer industry

• D.

The wage rate fall and an increase labor in both the shoe and computer industries

• E.

None of the above

A. The amount of labor and capital will increase in the shoe industry while the amount of labor and capital will decrease in the computer industry
Explanation
When the number of workers increases but the capital remains the same, the shoe industry, which uses less capital per worker, will be able to accommodate more workers. Therefore, the amount of labor and capital will increase in the shoe industry. On the other hand, the computer industry, which requires more capital per worker, will not be able to accommodate all the additional workers. As a result, the amount of labor and capital will decrease in the computer industry.

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• 14.

### Suppose that the computer industry use 2 units of capital for each worker while the shoe industry use 0.5 units of capital for each worker. Initially, there were 100 workers and 100 units of capital in the economy. If the units of capital increases to 125 due to FDI but the number of workers did not change, what is the amount of labor and capital used in each industry?

• A.

There are about 100 workers in the shoe industry and about 25 workers in the computer industry while there are 50 units of capital in the shoe industry and 50 units of capital in the computer industry

• B.

There are about 50 workers in the shoe industry and about 75 workers in the computer industry while there are 75 units of capital in the shoe industry and 25 units of capital in the computer industry

• C.

There are about 50 workers in the shoe industry and about 75 workers in the computer industry while there are 60 units of capital in the shoe industry and 40 units of capital in the computer industry

• D.

There are about 35 workers in the shoe and industry and about 90 workers in the computer industry while there are 75 units of capital in the shoe industry and 25 units of capital in the computer industry

• E.

None of the above

A. There are about 100 workers in the shoe industry and about 25 workers in the computer industry while there are 50 units of capital in the shoe industry and 50 units of capital in the computer industry
Explanation
The correct answer states that there are about 100 workers in the shoe industry and about 25 workers in the computer industry, while there are 50 units of capital in the shoe industry and 50 units of capital in the computer industry. This can be determined by using the given information that the computer industry uses 2 units of capital for each worker and the shoe industry uses 0.5 units of capital for each worker. Since the number of workers did not change and the units of capital increased to 125, it means that the shoe industry still has 100 workers and the computer industry still has 25 workers, while the capital is divided equally between the two industries. Therefore, there are 50 units of capital in each industry.

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• 15.

### In the long run, which of the following will occur if the U.S. federal government eliminates restrictions on migration of Mexican workers to the United States?

• A.

The United States' total K/L ratio will rise.

• B.

Mexico's total K/L ratio will fall

• C.

Wages of American workers who compete with Mexican workers for jobs will rise

• D.

The returns to U.S. owners of capital will remain unchanged

D. The returns to U.S. owners of capital will remain unchanged
Explanation
If the U.S. federal government eliminates restrictions on migration of Mexican workers to the United States, the returns to U.S. owners of capital will remain unchanged. This is because the increase in the supply of Mexican workers will lead to a larger labor force in the United States, which may put downward pressure on wages for American workers. However, the returns to U.S. owners of capital, such as business owners and investors, are not directly affected by changes in labor supply. Therefore, they are likely to remain unchanged in this scenario.

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• 16.

### Consider a hypothetical economy in which only computers and shoes are produced and in which computer production is capital intensive compared with shoe production. If two resources are being used, labor and capital, then any increase in immigration in the long run will:

• A.

Cause the capital/labor ratio to increase in the computer industry

• B.

Cause the capital/labor ratio to increase in the shoe industry.

• C.

Cause the capital/labor ratio to increase in both the industries

• D.

Increase the number of workers employed in the shoe industry.

D. Increase the number of workers employed in the shoe industry.
Explanation
In a capital-intensive economy, an increase in immigration will lead to an increase in the number of workers employed in the shoe industry. This is because immigration will provide an additional source of labor, allowing the shoe industry to expand its production capacity. Since computer production is capital intensive, the capital/labor ratio in the computer industry is unlikely to increase significantly. Therefore, the correct answer is to increase the number of workers employed in the shoe industry.

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• 17.

### Immigration will lead to a rightward shift in the receiving country's production possibilities frontier. What will be the result of this shift?

• A.

The shift will favor the labor-intensive good

• B.

The shift will favor the capital-intensive good

• C.

The shift will equally favor the labor-intensive and the capital-intensive good

• D.

The shift will cause an increase in the production of the labor-intensive good and a decrease in the capital-intensive good

A. The shift will favor the labor-intensive good
Explanation
Immigration leads to an increase in the labor force in the receiving country. As a result, there will be a greater availability of labor, which will lower the relative cost of labor-intensive production. This will make the labor-intensive good more competitive compared to the capital-intensive good. Therefore, the shift in the production possibilities frontier will favor the labor-intensive good.

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• 18.

### During the past 10 to 20 years, a considerable amount of foreign capital has flowed into China. What is an implication of capital flow upon the composition of Chinese trade?

• A.

There should be no change in the composition of China's trade.

• B.

There should be a shift toward the export of more labor-intensive products

• C.

There should be a shift toward the export of more capital-intensive products

• D.

There should be a shift toward the import of more capital-intensive products

C. There should be a shift toward the export of more capital-intensive products
Explanation
The influx of foreign capital into China suggests that there will be an increase in the production of capital-intensive products. This is because foreign capital typically seeks to invest in industries that require high levels of capital investment. As a result, Chinese firms are likely to shift their focus towards producing and exporting these capital-intensive products to cater to the demands of the foreign investors. This shift in production will lead to a change in the composition of China's trade, with a greater emphasis on exporting capital-intensive goods.

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• 19.

### The gains from immigration of labor or capital to the recipient nation can be summarized as:

• A.

The total cost of acquiring new resources versus the cost of using domestic resources

• B.

The increase in prices minus the increase in the unemployment rate.

• C.

The gain in domestic real GDP minus costs as a result of the immigration.

• D.

The impact on the ability of labor unions to attract new members and the ability of domestic firms to retain profits

C. The gain in domestic real GDP minus costs as a result of the immigration.
Explanation
The correct answer is the gain in domestic real GDP minus costs as a result of the immigration. This answer highlights the positive impact of immigration on the recipient nation's domestic real GDP, taking into account the costs associated with immigration. It suggests that the benefits of immigration, such as increased productivity and economic growth, outweigh any potential costs or challenges that may arise.

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• 20.

### A country produces goods A and B using labor (L) and capital (K). The data on the country’s industry factor intensity ratios KA/LA and KB/LB, international relative price PB/PA and the wage to rental ratio w/R are summarized in the table below Assume that the amount of capital in the country is 1200 units and the amount of labor in the country is 100 workers. What happens when the relative price increase from \$3 to \$4.

• A.

The MPL increase in both industries and the MPK increase in both industries

• B.

The MPL decrease in both industries and the MPK increase in both industries

• C.

The MPLA increase and MPKB decrease

• D.

The MPKA decrease and MPLB increase

• E.

The MPKA decrease and MPKA decrease