Question 1

Innovation

Accepted Answer

A) is the first discovery of a product or process, rather than its first successful commercial introduction. 
B) includes new products but not new production methods. 
C) is also known as diffusion. 
D) can either increase or decrease the market share of a large firm, depending on whether it is introduced by the large firm or one of its competitors. 
A) is the first discovery of a product or process, rather than its first successful commercial introduction. 
B) includes new products but not new production methods. 
C) is also known as diffusion. 
D) can either increase or decrease the market share of a large firm, depending on whether it is introduced by the large firm or one of its competitors. D

Question 2

Suppose that Book-Cost Busters (BCB), without authorization, reproduced a best-selling novel and placed it for downloading on the BCB pay-for-use website.This action would violate the publisher's

Accepted Answer

A) profit rights. 
B) patent. 
C) copyright. 
D) trademark. 
A) profit rights. 
B) patent. 
C) copyright. 
D) trademark. C

Question 3

Which among the following is the strongest determinant of an industry's technological progressiveness?

Accepted Answer

A) the scientific character of its industry and the number of technological opportunities available 
B) the size of the industry concentration ratio-the lower the ratio, the greater the firm's technological progressiveness 
C) the Herfindahl index in the firm's industry-the higher the index value, the greater the firm's technological progressiveness 
D) the amount of retained earnings in the industry 
A) the scientific character of its industry and the number of technological opportunities available 
B) the size of the industry concentration ratio-the lower the ratio, the greater the firm's technological progressiveness 
C) the Herfindahl index in the firm's industry-the higher the index value, the greater the firm's technological progressiveness 
D) the amount of retained earnings in the industry A

Question 4

The "inverted-U theory" of R&D shows the relationship between

Accepted Answer

A) marginal benefit and marginal cost of R&D. 
B) number of R&D projects and the sources of R&D funds. 
C) R&D expenditures and expected return. 
D) market concentration ratio and R&D expenditures. 
A) marginal benefit and marginal cost of R&D. 
B) number of R&D projects and the sources of R&D funds. 
C) R&D expenditures and expected return. 
D) market concentration ratio and R&D expenditures.

Question 5

For a new product to be profitable, it must

Accepted Answer

A) enable customers to obtain greater total utility from their money income. 
B) be less expensive than existing substitute products. 
C) have greater marginal utility than existing substitute products. 
D) embody process innovation. 
A) enable customers to obtain greater total utility from their money income. 
B) be less expensive than existing substitute products. 
C) have greater marginal utility than existing substitute products. 
D) embody process innovation.

Question 6

Entrepreneurs and innovative firms with past successes in developing products

Accepted Answer

A) have less access to resources for further innovation. 
B) have more access to resources for further innovation. 
C) will often turn to the government to fund the next venture. 
D) will often turn to international investors to fund the next venture. 
A) have less access to resources for further innovation. 
B) have more access to resources for further innovation. 
C) will often turn to the government to fund the next venture. 
D) will often turn to international investors to fund the next venture.

Question 7

In the United States, research and development spending as a percentage of GDP is

Accepted Answer

A) 1.5 to 2.0 percent, which is lower than many other industrial countries. 
B) 2.5 to 3.0 percent, which is higher than many other industrial countries. 
C) 4.5 to 5.0 percent, which is lower than many other industrial countries. 
D) 5.5 to 6.0 percent, which is higher than many other industrial countries. 
A) 1.5 to 2.0 percent, which is lower than many other industrial countries. 
B) 2.5 to 3.0 percent, which is higher than many other industrial countries. 
C) 4.5 to 5.0 percent, which is lower than many other industrial countries. 
D) 5.5 to 6.0 percent, which is higher than many other industrial countries.

Question 8

The first successful commercial introduction of a new product is called

Accepted Answer

A) innovation. 
B) research. 
C) invention. 
D) diffusion. 
A) innovation. 
B) research. 
C) invention. 
D) diffusion.

Question 9

The corporate decision on type and level of R&D activity is difficult because

Accepted Answer

A) the interest-rate cost of funds is difficult to estimate. 
B) much of corporate R&D is based on the pursuit of science, not on the profit motive. 
C) expected returns lie in the future and are highly uncertain. 
D) total returns and marginal returns greatly diverge. 
A) the interest-rate cost of funds is difficult to estimate. 
B) much of corporate R&D is based on the pursuit of science, not on the profit motive. 
C) expected returns lie in the future and are highly uncertain. 
D) total returns and marginal returns greatly diverge.

Question 10

Broadly defined, technological advance

Accepted Answer

A) can occur in the short run, long run, or very long run. 
B) comprises new and improved goods and services and/or new and improved ways of producing or distributing them. 
C) includes invention but not innovation or diffusion. 
D) includes product innovation but not process innovation. 
A) can occur in the short run, long run, or very long run. 
B) comprises new and improved goods and services and/or new and improved ways of producing or distributing them. 
C) includes invention but not innovation or diffusion. 
D) includes product innovation but not process innovation.

Question 11

If a firm improves its production method, this change will shift the firm's

Accepted Answer

A) total product curve downward. 
B) average cost curve downward. 
C) average cost curve upward. 
D) marginal cost curve upward. 
A) total product curve downward. 
B) average cost curve downward. 
C) average cost curve upward. 
D) marginal cost curve upward.

Question 12

R&D activities by government and universities have not been an important factor in fostering technological advance.

Accepted Answer

A) True 
 B)False

Question 13

Firm ABC designs and implements a lower-cost method of producing its product.This is an example of

Accepted Answer

A) product innovation. 
B) the inverted U-theory. 
C) economies of scale. 
D) process innovation. 
A) product innovation. 
B) the inverted U-theory. 
C) economies of scale. 
D) process innovation.

Question 14

The optimal amount of R&D spending for the firm occurs where its expected return is equal to the interest-rate cost-of-funds to finance it.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure identical to his unique-action "MarFish" lure, whatever the competitor might name the lure.This legal protection is most likely to be a

Accepted Answer

A) trademark. 
B) restraining order. 
C) patent. 
D) copyright. 
A) trademark. 
B) restraining order. 
C) patent. 
D) copyright.

Question 16

Which of the following statements does not apply when a firm's rivals imitate its innovation.

Accepted Answer

A) It tends to reduce the originator's profits 
B) It enhances the innovator's returns to its R&D expenditures. 
C) It is often the path to widespread diffusion of the innovation. 
D) It helps other firms incorporate innovative features into their own operations. 
A) It tends to reduce the originator's profits 
B) It enhances the innovator's returns to its R&D expenditures. 
C) It is often the path to widespread diffusion of the innovation. 
D) It helps other firms incorporate innovative features into their own operations.

Question 17

The traditional view of technological advance was that it

Accepted Answer

A) was a random external force to which the economy adjusted. 
B) arose largely from advances in military-related research. 
C) was the result of capitalism and the rivalry among firms. 
D) arose from international trade and the sharing of ideas among nations. 
A) was a random external force to which the economy adjusted. 
B) arose largely from advances in military-related research. 
C) was the result of capitalism and the rivalry among firms. 
D) arose from international trade and the sharing of ideas among nations.

Question 18

Legal protections against competitors producing and selling a product identical to the one you invented are called ; legal protections against competitors using your product's name are called .

Accepted Answer

A) patents; trademarks 
B) trademarks; copyrights 
C) copyrights; patents 
D) trademarks; patents 
A) patents; trademarks 
B) trademarks; copyrights 
C) copyrights; patents 
D) trademarks; patents

Question 19

A "fast-second strategy" means that a dominant firm in an industry

Accepted Answer

A) uses just-in-time inventory control methods to speed production. 
B) cuts the development time for the introduction of a new product. 
C) lets smaller firms initiate new products and then quickly imitates the success. 
D) merges with the second largest firm in the industry to gain a larger market share. 
A) uses just-in-time inventory control methods to speed production. 
B) cuts the development time for the introduction of a new product. 
C) lets smaller firms initiate new products and then quickly imitates the success. 
D) merges with the second largest firm in the industry to gain a larger market share.

Question 20

A firm's optimal amount of R&D occurs where the interest-rate cost of funds and the expected rate of return are equal.

Accepted Answer

A) True 
 B)False

Exam 15: Technology, Rd, and Efficiency

Innovation

Suppose that Book-Cost Busters (BCB), without authorization, reproduced a best-selling novel and placed it for downloading on the BCB pay-for-use website.This action would violate the publisher's

Which among the following is the strongest determinant of an industry's technological progressiveness?

The "inverted-U theory" of R&D shows the relationship between

For a new product to be profitable, it must

Entrepreneurs and innovative firms with past successes in developing products

In the United States, research and development spending as a percentage of GDP is

The first successful commercial introduction of a new product is called

The corporate decision on type and level of R&D activity is difficult because

Broadly defined, technological advance

If a firm improves its production method, this change will shift the firm's

R&D activities by government and universities have not been an important factor in fostering technological advance.

Firm ABC designs and implements a lower-cost method of producing its product.This is an example of

The optimal amount of R&D spending for the firm occurs where its expected return is equal to the interest-rate cost-of-funds to finance it.

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure identical to his unique-action "MarFish" lure, whatever the competitor might name the lure.This legal protection is most likely to be a

Which of the following statements does not apply when a firm's rivals imitate its innovation.

The traditional view of technological advance was that it

Legal protections against competitors producing and selling a product identical to the one you invented are called ; legal protections against competitors using your product's name are called .

A "fast-second strategy" means that a dominant firm in an industry

A firm's optimal amount of R&D occurs where the interest-rate cost of funds and the expected rate of return are equal.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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