Question 1

An industry with which of the following four-firm concentration ratios would tend to have the greatest amount of R&D expenditures as a percentage of sales?

Accepted Answer

A) 0 
B) 10 
C) 50 
D) 100 
A) 0 
B) 10 
C) 50 
D) 100

Question 2

Kara's Kettles, Inc.has developed a new and improved type of cookware.Alex, a typical consumer, will necessarily purchase Kara's new product if his MU/P for the new cookware exceeds that of competing products.

Accepted Answer

A) True 
 B)False

Question 3

Consumer acceptance of a new product depends on

Accepted Answer

A) price alone. 
B) marginal utility alone. 
C) price and marginal utility. 
D) total utility divided by marginal utility. 
A) price alone. 
B) marginal utility alone. 
C) price and marginal utility. 
D) total utility divided by marginal utility.

Question 4

Which of the following does not aptly describe innovation?

Accepted Answer

A) first commercial use of a new production process 
B) discovery of a new production method 
C) creation of a new form of business enterprise 
D) commercial introduction of a new product 
A) first commercial use of a new production process 
B) discovery of a new production method 
C) creation of a new form of business enterprise 
D) commercial introduction of a new product

Question 5

U.S.business firms channel a majority of their R&D expenditures to scientific research.

Accepted Answer

A) True 
 B)False

Question 6

Technological advance increases productive efficiency by giving society a more preferred mix of goods.

Accepted Answer

A) True 
 B)False

Question 7

Funds lent to start-up firms in return for shares of the profit if the firms succeed are called

Accepted Answer

A) retained earnings. 
B) time deposits. 
C) venture capital. 
D) transfer payments. 
A) retained earnings. 
B) time deposits. 
C) venture capital. 
D) transfer payments.

Question 8

All inventors are entrepreneurs.

Accepted Answer

A) True 
 B)False

Question 9

Other things equal, patents

Accepted Answer

A) decrease the expected rate of return on an R&D expenditure. 
B) increase the expected rate of return on an R&D expenditure. 
C) increase the interest-rate cost of funds used to finance an R&D expenditure. 
D) decrease the interest-rate cost of funds used to finance an R&D expenditure. 
A) decrease the expected rate of return on an R&D expenditure. 
B) increase the expected rate of return on an R&D expenditure. 
C) increase the interest-rate cost of funds used to finance an R&D expenditure. 
D) decrease the interest-rate cost of funds used to finance an R&D expenditure.

Question 10

The profit-enhancing impact of product innovation tends to be on all of the following, except

Accepted Answer

A) the firm's revenues. 
B) the buyers' utility derived from the product. 
C) the firm's cost of production. 
D) the attractiveness of the product to buyers. 
A) the firm's revenues. 
B) the buyers' utility derived from the product. 
C) the firm's cost of production. 
D) the attractiveness of the product to buyers.

Question 11

To maintain returns from research and development, firms

Accepted Answer

A) sponsor start-ups. 
B) keep trade secrets. 
C) use a fast-second strategy. 
D) advocate creative destruction. 
A) sponsor start-ups. 
B) keep trade secrets. 
C) use a fast-second strategy. 
D) advocate creative destruction.

Question 12

Suppose a firm anticipates that a particular R&D expenditure of $100 million will result in a new product and thus create a one-time added profit of $108 million a year later.The firm will

Accepted Answer

A) undertake the R&D expenditure if its interest-rate cost of borrowing is 12 percent. 
B) undertake the R&D expenditure if its interest-rate cost of borrowing is 10 percent. 
C) not undertake the R&D expenditure if its interest-rate cost of borrowing is 9 percent. 
D) not undertake the R&D expenditure if its interest-rate cost of borrowing is 7 percent. 
A) undertake the R&D expenditure if its interest-rate cost of borrowing is 12 percent. 
B) undertake the R&D expenditure if its interest-rate cost of borrowing is 10 percent. 
C) not undertake the R&D expenditure if its interest-rate cost of borrowing is 9 percent. 
D) not undertake the R&D expenditure if its interest-rate cost of borrowing is 7 percent.

Question 13

In economists' models, technological advance occurs in

Accepted Answer

A) the very long run. 
B) either the short run, long run, or very long run. 
C) manufacturing industries but not in service industries. 
D) pure competition but not in monopolistic competition, oligopoly, and pure monopoly. 
A) the very long run. 
B) either the short run, long run, or very long run. 
C) manufacturing industries but not in service industries. 
D) pure competition but not in monopolistic competition, oligopoly, and pure monopoly.

Question 14

In exchange for a share of ZYX's profits if it succeeds, Firm ABC provides development funds to newly formed ZYX, which is developing an innovative product.ABC funds are called , while ZYX is known as a .

Accepted Answer

A) venture capital; start-up 
B) retained earnings; entrepreneurial firm 
C) mutual funds; start-up 
D) transfer payments; entrepreneurial firm 
A) venture capital; start-up 
B) retained earnings; entrepreneurial firm 
C) mutual funds; start-up 
D) transfer payments; entrepreneurial firm

Question 15

Which of the following are aptly considered entrepreneurs?

Accepted Answer

A) top executives of a company 
B) government officials 
C) hired managers of banks 
D) those who form start-ups 
A) top executives of a company 
B) government officials 
C) hired managers of banks 
D) those who form start-ups

Question 16

Which market structure offers little incentive to engage in R&D?

Accepted Answer

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

Question 17

Process innovation raises the firm's total product curve and lowers its average total cost curve.

Accepted Answer

A) True 
 B)False

Question 18

The legal protection that gives the original innovators of products the exclusive right to use a particular product name is a

Accepted Answer

A) patent. 
B) copyright. 
C) brand name. 
D) trademark. 
A) patent. 
B) copyright. 
C) brand name. 
D) trademark.

Question 19

A profit-maximizing firm should not undertake an R&D project for which the

Accepted Answer

A) expected rate of return exceeds its interest-rate cost of funds. 
B) interest-rate cost of funds exceeds the expected rate of return. 
C) expected returns are in the distant future. 
D) expected returns, though potentially very large, are uncertain. 
A) expected rate of return exceeds its interest-rate cost of funds. 
B) interest-rate cost of funds exceeds the expected rate of return. 
C) expected returns are in the distant future. 
D) expected returns, though potentially very large, are uncertain.

Question 20

Technological advance may lead to new monopolies and may also destroy existing monopolies.

Accepted Answer

A) True 
 B)False

Exam 15: Technology, Rd, and Efficiency

An industry with which of the following four-firm concentration ratios would tend to have the greatest amount of R&D expenditures as a percentage of sales?

Kara's Kettles, Inc.has developed a new and improved type of cookware.Alex, a typical consumer, will necessarily purchase Kara's new product if his MU/P for the new cookware exceeds that of competing products.

Consumer acceptance of a new product depends on

Which of the following does not aptly describe innovation?

U.S.business firms channel a majority of their R&D expenditures to scientific research.

Technological advance increases productive efficiency by giving society a more preferred mix of goods.

Funds lent to start-up firms in return for shares of the profit if the firms succeed are called

All inventors are entrepreneurs.

Other things equal, patents

The profit-enhancing impact of product innovation tends to be on all of the following, except

To maintain returns from research and development, firms

Suppose a firm anticipates that a particular R&D expenditure of $100 million will result in a new product and thus create a one-time added profit of $108 million a year later.The firm will

In economists' models, technological advance occurs in

In exchange for a share of ZYX's profits if it succeeds, Firm ABC provides development funds to newly formed ZYX, which is developing an innovative product.ABC funds are called , while ZYX is known as a .

Which of the following are aptly considered entrepreneurs?

Which market structure offers little incentive to engage in R&D?

Process innovation raises the firm's total product curve and lowers its average total cost curve.

The legal protection that gives the original innovators of products the exclusive right to use a particular product name is a

A profit-maximizing firm should not undertake an R&D project for which the

Technological advance may lead to new monopolies and may also destroy existing monopolies.

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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