Question 1

Technological advance improves productive efficiency by

Accepted Answer

A)  lowering average total cost.
B)  increasing marginal utility.
C)  enhancing monopoly power.
D)  giving society a more-preferred mix of goods and services.E) A) and B)
F) None of the above

Question 2

Successful new products enable consumers to increase the total utility they obtain from a specific amount of their total spending.

Accepted Answer

A) True 
 B)False

Question 3

A common way by which governments encourage invention is by providing the inventor with a

Accepted Answer

A)  patent.
B)  copyright.
C)  trade secret.
D)  trademark.E) A) and B)
F) None of the above

Question 4

The U.S.government has been increasing the portion of its budget and its spending on R&D activities, for the nation's long-term growth.

Accepted Answer

A) True 
 B)False

Question 5

A firm's marginal benefit from its R&D expenditures is the

Accepted Answer

A)  total amount spent on its R&D activities.
B)  expected profit from the last dollar spent on R&D.
C)  employment generated by the largest R&D project.
D)  resources bought for all of its R&D activities.E) B) and C)
F) None of the above

Question 6

Which pair of market structures provides firms with the greatest ability to finance R&D out of retained earnings?

Accepted Answer

A)  oligopolists and pure monopolists
B)  pure competitors and pure monopolists
C)  pure competitors and monopolistic competitors
D)  monopolistic competitors and pure monopolistsE) B) and D)
F) B) and C)

Question 7

The theory that R&D expenditures as a percentage of firms' sales first rise, reach a peak, and then fall with increases in industry concentration is called the inverted-U theory of R&D.

Accepted Answer

A) True 
 B)False

Question 8

An amount of R&D spending that is greater than the optimal amount indicates that the

Accepted Answer

A)  marginal benefit of R&D expenditures is equal to the marginal cost.
B)  marginal benefit of R&D expenditures is greater than the marginal cost.
C)  interest-rate cost-of-funds is less than the expected rate of return.
D)  interest-rate cost-of-funds is greater than the expected rate of return.E) B) and C)
F) C) and D)

Question 9

Entrepreneurs differ from other innovators because they

Accepted Answer

A)  are more inventive.
B)  bear personal financial risk.
C)  have better management skills.
D)  have the capacity to work in teams.E) A) and B)
F) B) and D)

Question 10

Other things equal, trademarks and brand names

Accepted Answer

A)  increase the interest-rate cost of funds used to finance R&D expenditures.
B)  decrease the interest-rate cost of funds used to finance R&D expenditures.
C)  decrease the expected rate of return on R&D expenditures.
D)  increase the expected rate of return on R&D expenditures.E) A) and C)
F) A) and B)

Question 11

The reason that innovation promotes competition is because

Accepted Answer

A)  innovative firms can charge any price they want for a new product.
B)  it lowers the research and development costs for innovative firms.
C)  firms use it to make competitors' products obsolete in the market.
D)  government provides patent protection for innovation that lasts for a long time.E) B) and D)
F) C) and D)

Question 12

Creative destruction is the situation where the creation of new products destroys the monopoly market positions of firms producing existing products.

Accepted Answer

A) True 
 B)False

Question 13

In business, the abbreviation "R&D" refers to recreation and discovery.

Accepted Answer

A) True 
 B)False

Question 14

A consumer had been consuming product X for some time.This period, she buys fewer X in order to try some units of a new product Y.She finds that her marginal utility of X is 20 (at a price of $10 per unit) , while the marginal utility of Y is 36 (at a price of $12) .The utility-maximizing rule suggests that this consumer should

Accepted Answer

A)  increase consumption of product X because of its lower price.
B)  increase consumption of product X because it is an old reliable product.
C)  increase consumption of product Y because it has a higher MU/P.
D)  increase consumption of product Y because it has a higher MU.E) A) and B)
F) None of the above

Question 15

Process innovation refers to

Accepted Answer

A)  development of new products.
B)  implementation of better methods of producing products.
C)  first discovery of new scientific principles.
D)  widespread imitation of innovations.E) B) and D)
F) C) and D)

Question 16

Kodak introduced to the marketplace a digital camera that uses no film but takes photos that can be shown on personal computers.This is an example of

Accepted Answer

A)  economies of scale.
B)  product innovation.
C)  process innovation.
D)  venture capital.E) B) and C)
F) A) and C)

Question 17

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic.Which of the following would decrease a firm's optimal R&D expenditures and, in equilibrium, increase the expected rate of return on the last dollar of R&D?

Accepted Answer

A)  a rightward shift of the expected-rate-of-return curve
B)  an upward shift of the interest-rate cost-of-funds curve
C)  a leftward shift of the expected-rate-of-return curve
D)  a downward shift of the interest-rate cost-of-funds curveE) All of the above
F) None of the above

Question 18

Which of the following firms was not a "start-up"?

Accepted Answer

A)  Google
B)  Starbucks
C)  Apple
D)  Lucent TechnologiesE) B) and D)
F) A) and B)

Question 19

Economists who contend that oligopolists have a strong incentive to engage in R&D say that

Accepted Answer

A)  the undistributed profits of oligopolists give them a source of readily available, relatively low-cost funds for financing R&D.
B)  entry barriers enable oligopolists to sustain the profit they gain from innovation.
C)  the large size of oligopolists' R&D departments allows them to use specialized, expensive R&D equipment and employ teams of specialized researchers.
D)  all of the other answers are true.E) A) and D)
F) All of the above

Question 20

What is an example of a technological breakthrough that came out of a government or university laboratory?

Accepted Answer

A)  hybrid seeds
B)  Scotch tape
C)  Thinsulate insulation
D)  Post-it note padsE) A) and B)
F) None of the above

Exam 15: Technology, Rd, and Efficiency

A common way by which governments encourage invention is by providing the inventor with a

Correct Answer
verified

The reason that innovation promotes competition is because

Correct Answer
verified

Other things equal, trademarks and brand names

Correct Answer
verified

Creative destruction is the situation where the creation of new products destroys the monopoly market positions of firms producing existing products.

Correct Answer
verified

Process innovation refers to

Correct Answer
verified

Entrepreneurs differ from other innovators because they

Correct Answer
verified

The theory that R&D expenditures as a percentage of firms' sales first rise, reach a peak, and then fall with increases in industry concentration is called the inverted-U theory of R&D.

Correct Answer
verified

Kodak introduced to the marketplace a digital camera that uses no film but takes photos that can be shown on personal computers.This is an example of

Correct Answer
verified

Which of the following firms was not a "start-up"?

Correct Answer
verified

Technological advance improves productive efficiency by

Correct Answer
verified

What is an example of a technological breakthrough that came out of a government or university laboratory?

Correct Answer
verified

Economists who contend that oligopolists have a strong incentive to engage in R&D say that

Correct Answer
verified

An amount of R&D spending that is greater than the optimal amount indicates that the

Correct Answer
verified

In business, the abbreviation "R&D" refers to recreation and discovery.

Correct Answer
verified

The U.S.government has been increasing the portion of its budget and its spending on R&D activities, for the nation's long-term growth.

Correct Answer
verified

Correct Answer
verified

Successful new products enable consumers to increase the total utility they obtain from a specific amount of their total spending.

Correct Answer
verified

Which pair of market structures provides firms with the greatest ability to finance R&D out of retained earnings?

Correct Answer
verified

A firm's marginal benefit from its R&D expenditures is the

Correct Answer
verified

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic.Which of the following would decrease a firm's optimal R&D expenditures and, in equilibrium, increase the expected rate of return on the last dollar of R&D?

Correct Answer
verified

Exam 15: Technology, Rd, and Efficiency

A common way by which governments encourage invention is by providing the inventor with a

Correct AnswerverifiedShow Answer

The reason that innovation promotes competition is because

Correct AnswerverifiedShow Answer

Other things equal, trademarks and brand names

Correct AnswerverifiedShow Answer

Creative destruction is the situation where the creation of new products destroys the monopoly market positions of firms producing existing products.

Correct AnswerverifiedShow Answer

Process innovation refers to

Correct AnswerverifiedShow Answer

Entrepreneurs differ from other innovators because they

Correct AnswerverifiedShow Answer

The theory that R&D expenditures as a percentage of firms' sales first rise, reach a peak, and then fall with increases in industry concentration is called the inverted-U theory of R&D.

Correct AnswerverifiedShow Answer

Kodak introduced to the marketplace a digital camera that uses no film but takes photos that can be shown on personal computers.This is an example of

Correct AnswerverifiedShow Answer

Which of the following firms was not a "start-up"?

Correct AnswerverifiedShow Answer

Technological advance improves productive efficiency by

Correct AnswerverifiedShow Answer

What is an example of a technological breakthrough that came out of a government or university laboratory?

Correct AnswerverifiedShow Answer

Economists who contend that oligopolists have a strong incentive to engage in R&D say that

Correct AnswerverifiedShow Answer

An amount of R&D spending that is greater than the optimal amount indicates that the

Correct AnswerverifiedShow Answer

In business, the abbreviation "R&D" refers to recreation and discovery.

Correct AnswerverifiedShow Answer

The U.S.government has been increasing the portion of its budget and its spending on R&D activities, for the nation's long-term growth.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Successful new products enable consumers to increase the total utility they obtain from a specific amount of their total spending.

Correct AnswerverifiedShow Answer

Which pair of market structures provides firms with the greatest ability to finance R&D out of retained earnings?

Correct AnswerverifiedShow Answer

A firm's marginal benefit from its R&D expenditures is the

Correct AnswerverifiedShow Answer

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic.Which of the following would decrease a firm's optimal R&D expenditures and, in equilibrium, increase the expected rate of return on the last dollar of R&D?

Correct AnswerverifiedShow Answer

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