Question 1

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. 
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.

Question 2

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 3

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

Accepted Answer

A) Google 
B) Starbucks 
C) Apple 
D) Lucent Technologies 
A) Google 
B) Starbucks 
C) Apple 
D) Lucent Technologies

Question 4

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. 
A) lowering average total cost. 
B) increasing marginal utility. 
C) enhancing monopoly power. 
D) giving society a more-preferred mix of goods and services.

Question 5

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 6

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. 
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.

Question 7

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. 
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.

Question 8

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 pads 
A) hybrid seeds 
B) Scotch tape 
C) Thinsulate insulation 
D) Post-it note pads

Question 9

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. 
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.

Question 10

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

Question 11

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. 
A) patent. 
B) copyright. 
C) trade secret. 
D) trademark.

Question 12

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

Question 13

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. 
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.

Question 14

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 curve 
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 curve

Question 15

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 16

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

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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. 
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.

Question 19

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. 
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.

Question 20

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

Exam 15: Technology, Rd, and Efficiency

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

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.

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

Technological advance improves productive efficiency by

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

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

Other things equal, trademarks and brand names

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

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

Entrepreneurs differ from other innovators because they

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

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

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?

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

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

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

Process innovation refers to

The reason that innovation promotes competition is because

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.

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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