Question 1

Process innovation is represented as a downward shift in a firm's total product curve and its average total cost curve.

Accepted Answer

A) True 
 B)False

Question 2

Under which market structure are profit rewards most likely to be quickly taken away by existing firms or new firms entering the industry?

Accepted Answer

A) oligopoly 
B) pure monopoly 
C) pure competition 
D) monopolistic competition 
A) oligopoly 
B) pure monopoly 
C) pure competition 
D) monopolistic competition

Question 3

The interest-rate cost-of-funds curve is perfectly elastic because firms can borrow as much or as little as they want at market interest rates.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that a firm's legal staff concludes that a new production process that the firm is developing is patentable.Graphically, this new information would shift the firm's expected-rate-of-return curve on R&D to the

Accepted Answer

A) right and reduce its optimal amount of R&D. 
B) right and increase its optimal amount of R&D. 
C) left and increase its optimal amount of R&D. 
D) left and reduce its optimal amount of R&D. 
A) right and reduce its optimal amount of R&D. 
B) right and increase its optimal amount of R&D. 
C) left and increase its optimal amount of R&D. 
D) left and reduce its optimal amount of R&D.

Question 5

Which of the following is a true statement?

Accepted Answer

A) Innovation normally follows invention and precedes diffusion. 
B) Invention normally follows diffusion and precedes innovation. 
C) Diffusion normally follows invention and precedes innovation. 
D) Innovation normally follows diffusion and precedes invention. 
A) Innovation normally follows invention and precedes diffusion. 
B) Invention normally follows diffusion and precedes innovation. 
C) Diffusion normally follows invention and precedes innovation. 
D) Innovation normally follows diffusion and precedes invention.

Question 6

The following are examples of technological breakthroughs that came out of a government or university laboratory, except

Accepted Answer

A) the Internet. 
B) genetic engineering. 
C) nuclear energy. 
D) disposable contact lenses. 
A) the Internet. 
B) genetic engineering. 
C) nuclear energy. 
D) disposable contact lenses.

Question 7

The major source of new scientific knowledge in the United States is

Accepted Answer

A) university and government research. 
B) R&D work in large corporations. 
C) entrepreneurs working alone. 
D) purely competitive and monopolistically competitive firms. 
A) university and government research. 
B) R&D work in large corporations. 
C) entrepreneurs working alone. 
D) purely competitive and monopolistically competitive firms.

Question 8

The worldwide duration of patents that begins at the time of application is

Accepted Answer

A) 10 years. 
B) 1 year. 
C) 20 years. 
D) 50 years. 
A) 10 years. 
B) 1 year. 
C) 20 years. 
D) 50 years.

Question 9

Which of the following supports the contention that monopolistic competitors have a strong incentive to engage in R&D?

Accepted Answer

A) Entry to monopolistic competitive industries is relatively easy, and thus profit from innovation is quickly competed away. 
B) Most monopolistic competitive industries are decreasing-cost industries. 
C) The desire to differentiate products from competitors may motivate monopolistic competitors to engage in R&D. 
D) Monopolistic competitors have large retained earnings that are available to finance R&D. 
A) Entry to monopolistic competitive industries is relatively easy, and thus profit from innovation is quickly competed away. 
B) Most monopolistic competitive industries are decreasing-cost industries. 
C) The desire to differentiate products from competitors may motivate monopolistic competitors to engage in R&D. 
D) Monopolistic competitors have large retained earnings that are available to finance R&D.

Question 10

Henry Ford's development of an assembly method for building cars and trucks would be an example of

Accepted Answer

A) product improvement. 
B) fast-second strategy. 
C) process innovation. 
D) inverted-U theory. 
A) product improvement. 
B) fast-second strategy. 
C) process innovation. 
D) inverted-U theory.

Question 11

If a particular R&D expenditure is expected to be worthwhile, the firm should undertake it because the project will definitely increase the firm's future profits.

Accepted Answer

A) True 
 B)False

Question 12

U.S.firms collectively devote the largest portion of their total R&D spending to

Accepted Answer

A) applied research (pursuing invention). 
B) basic scientific research. 
C) innovation and diffusion. 
D) financing start-up firms. 
A) applied research (pursuing invention). 
B) basic scientific research. 
C) innovation and diffusion. 
D) financing start-up firms.

Question 13

A major source of funding of R&D in large, established corporations is

Accepted Answer

A) venture capital. 
B) dividends. 
C) mutual funds. 
D) retained earnings. 
A) venture capital. 
B) dividends. 
C) mutual funds. 
D) retained earnings.

Question 14

Imitation by rivals is one factor that hinders the diffusion of technological advances.

Accepted Answer

A) True 
 B)False

Question 15

Consumers will make a decision to purchase a new product only if it

Accepted Answer

A) has a lower marginal utility per dollar spent than another product. 
B) is recommended as a valuable product by other consumers. 
C) increases the total utility they obtain from their limited income. 
D) can be sold at a lower price than that for a competing product. 
A) has a lower marginal utility per dollar spent than another product. 
B) is recommended as a valuable product by other consumers. 
C) increases the total utility they obtain from their limited income. 
D) can be sold at a lower price than that for a competing product.

Question 16

In 2015, the following firms were among the top 10 in terms of securing the most U.S.patents, except

Accepted Answer

A) IBM. 
B) Google. 
C) Intel. 
D) Amazon. 
A) IBM. 
B) Google. 
C) Intel. 
D) Amazon.

Question 17

The two types of innovation are product innovation and

Accepted Answer

A) resource innovation. 
B) market innovation. 
C) process innovation. 
D) financial innovation. 
A) resource innovation. 
B) market innovation. 
C) process innovation. 
D) financial innovation.

Question 18

(Consider This) The central idea illustrated by the vignette on "catgut" used as violin strings is

Accepted Answer

A) patent rights. 
B) research and development activity. 
C) derived demand. 
D) trade secrets. 
A) patent rights. 
B) research and development activity. 
C) derived demand. 
D) trade secrets.

Question 19

(Last Word) The percentage of the U.S.federal budget spent on R&D has

Accepted Answer

A) risen significantly over the past 50 years. 
B) remained stable over the past 50 years. 
C) declined substantially over the past 50 years. 
D) risen dramatically in the past few years after a steady decline starting in 1980. 
A) risen significantly over the past 50 years. 
B) remained stable over the past 50 years. 
C) declined substantially over the past 50 years. 
D) risen dramatically in the past few years after a steady decline starting in 1980.

Question 20

Which two market structures have a strong need to innovate but have low expected returns on R&D expenditures?

Accepted Answer

A) monopoly and oligopoly 
B) oligopoly and pure competition 
C) monopoly and monopolistic competition 
D) monopolistic competition and pure competition 
A) monopoly and oligopoly 
B) oligopoly and pure competition 
C) monopoly and monopolistic competition 
D) monopolistic competition and pure competition

Exam 15: Technology, Rd, and Efficiency

Process innovation is represented as a downward shift in a firm's total product curve and its average total cost curve.

Under which market structure are profit rewards most likely to be quickly taken away by existing firms or new firms entering the industry?

The interest-rate cost-of-funds curve is perfectly elastic because firms can borrow as much or as little as they want at market interest rates.

Suppose that a firm's legal staff concludes that a new production process that the firm is developing is patentable.Graphically, this new information would shift the firm's expected-rate-of-return curve on R&D to the

Which of the following is a true statement?

The following are examples of technological breakthroughs that came out of a government or university laboratory, except

The major source of new scientific knowledge in the United States is

The worldwide duration of patents that begins at the time of application is

Which of the following supports the contention that monopolistic competitors have a strong incentive to engage in R&D?

Henry Ford's development of an assembly method for building cars and trucks would be an example of

If a particular R&D expenditure is expected to be worthwhile, the firm should undertake it because the project will definitely increase the firm's future profits.

U.S.firms collectively devote the largest portion of their total R&D spending to

A major source of funding of R&D in large, established corporations is

Imitation by rivals is one factor that hinders the diffusion of technological advances.

Consumers will make a decision to purchase a new product only if it

In 2015, the following firms were among the top 10 in terms of securing the most U.S.patents, except

The two types of innovation are product innovation and

(Consider This) The central idea illustrated by the vignette on "catgut" used as violin strings is

(Last Word) The percentage of the U.S.federal budget spent on R&D has

Which two market structures have a strong need to innovate but have low expected returns on R&D expenditures?

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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