Question 1

"Intrapreneurs" is the term sometimes used to refer to

Accepted Answer

A) entrepreneurs who are initiators and risk bearers. 
B) business people who pool their financial resources to pursue a business idea. 
C) individuals who work as their own bosses. 
D) salaried employees engaged in R&D activities in existing companies. 
A) entrepreneurs who are initiators and risk bearers. 
B) business people who pool their financial resources to pursue a business idea. 
C) individuals who work as their own bosses. 
D) salaried employees engaged in R&D activities in existing companies.

Question 2

A consumer will buy a new product rather than an existing product

Accepted Answer

A) when the MU/P of the new product is less than the MU/P of the existing product. 
B) when the substitution of the new product for the old product increases the consumer's total utility. 
C) only if the new product has a lower price than the existing product. 
D) only if the MU of the new product exceeds the MU of the existing product. 
A) when the MU/P of the new product is less than the MU/P of the existing product. 
B) when the substitution of the new product for the old product increases the consumer's total utility. 
C) only if the new product has a lower price than the existing product. 
D) only if the MU of the new product exceeds the MU of the existing product.

Question 3

The discovery of a product or process through the use of imagination, ingenious thinking, and experimentation is

Accepted Answer

A) process innovation. 
B) product innovation. 
C) invention. 
D) imitation. 
A) process innovation. 
B) product innovation. 
C) invention. 
D) imitation.

Question 4

The marginal cost-of-funds curve for a firm shows the

Accepted Answer

A) interest rate that a firm must pay for additional funding. 
B) rate of return that a firm gets from its investment projects. 
C) amount of funds available to a firm for its investments. 
D) sources of funds that a firm has for its various projects. 
A) interest rate that a firm must pay for additional funding. 
B) rate of return that a firm gets from its investment projects. 
C) amount of funds available to a firm for its investments. 
D) sources of funds that a firm has for its various projects.

Question 5

Fast-second strategies are more likely to be used by

Accepted Answer

A) dominant firms than by start-up firms. 
B) pure competitors rather than by oligopolists. 
C) start-up firms rather than by existing firms. 
D) entrepreneurs rather than by corporations. 
A) dominant firms than by start-up firms. 
B) pure competitors rather than by oligopolists. 
C) start-up firms rather than by existing firms. 
D) entrepreneurs rather than by corporations.

Question 6

Which of the following would be the best example of a "start-up"?

Accepted Answer

A) the formation of Imation by the 3Com Corporation 
B) the founding of Apple by Jobs and Wozniak 
C) the buyout of McCaw Communications by AT&T 
D) the sale of a license by IBM to Dell computers 
A) the formation of Imation by the 3Com Corporation 
B) the founding of Apple by Jobs and Wozniak 
C) the buyout of McCaw Communications by AT&T 
D) the sale of a license by IBM to Dell computers

Question 7

The first discovery of the water-soluble material used in contact lenses is an example of

Accepted Answer

A) innovation. 
B) invention. 
C) creative destruction. 
D) diffusion. 
A) innovation. 
B) invention. 
C) creative destruction. 
D) diffusion.

Question 8

In the inverted-U theory of R&D, which of the following industry concentration ratios would be most conducive to R&D (as a percentage of firm sales)?

Accepted Answer

A) 1 percent 
B) 10 percent 
C) 50 percent 
D) 70 percent 
A) 1 percent 
B) 10 percent 
C) 50 percent 
D) 70 percent

Question 9

Joseph Schumpeter viewed capitalism as a process of "creative destruction" because

Accepted Answer

A) profitable firms are bought out by larger firms. 
B) capitalism would create wealth, but government would destroy it. 
C) the creation of new products would destroy the market for existing products. 
D) invention is a creative process, but most ideas are destroyed when entrepreneurs develop and market products. 
A) profitable firms are bought out by larger firms. 
B) capitalism would create wealth, but government would destroy it. 
C) the creation of new products would destroy the market for existing products. 
D) invention is a creative process, but most ideas are destroyed when entrepreneurs develop and market products.

Question 10

Suppose a firm anticipates that an R&D expenditure of $100 million will result in a new production process that will reduce costs and thus create a one-time added profit of $112 million a year later.The firm's expected rate of return is

Accepted Answer

A) 0.12 percent. 
B) 112 percent. 
C) 12 percent. 
D) 2 percent. 
A) 0.12 percent. 
B) 112 percent. 
C) 12 percent. 
D) 2 percent.

Question 11

The modern view of technological advance is that it

Accepted Answer

A) is the result of random lucky events unrelated to the economic system. 
B) requires government R&D spending to keep it going. 
C) arises from intense rivalry among individuals and firms within the capitalist system. 
D) is a force that is external to the economy, to which the economy adjusts. 
A) is the result of random lucky events unrelated to the economic system. 
B) requires government R&D spending to keep it going. 
C) arises from intense rivalry among individuals and firms within the capitalist system. 
D) is a force that is external to the economy, to which the economy adjusts.

Question 12

Process innovation will shift a firm's

Accepted Answer

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

Question 13

Product innovation contributes to technological advance primarily by

Accepted Answer

A) decreasing allocative efficiency. 
B) increasing allocative efficiency. 
C) decreasing productive efficiency. 
D) increasing productive efficiency. 
A) decreasing allocative efficiency. 
B) increasing allocative efficiency. 
C) decreasing productive efficiency. 
D) increasing productive efficiency.

Question 14

Other things equal, the prospect of imitation by others

Accepted Answer

A) decreases the expected rate of return on R&D expenditures. 
B) increases the expected rate of return on R&D expenditures. 
C) increases the interest-rate cost of funds used to finance R&D expenditures. 
D) decreases the interest-rate cost of funds used to finance R&D expenditures. 
A) decreases the expected rate of return on R&D expenditures. 
B) increases the expected rate of return on R&D expenditures. 
C) increases the interest-rate cost of funds used to finance R&D expenditures. 
D) decreases the interest-rate cost of funds used to finance R&D expenditures.

Question 15

The retained earnings that corporations often use to finance R&D are also known as

Accepted Answer

A) venture capital. 
B) undistributed profits. 
C) dividends. 
D) mutual funds. 
A) venture capital. 
B) undistributed profits. 
C) dividends. 
D) mutual funds.

Question 16

The optimal amount of R&D for a firm depends on the following, except

Accepted Answer

A) marginal cost of funds for R&D projects. 
B) marginal benefit of R&D projects. 
C) expected profitability of R&D projects. 
D) amount of funds the firm currently has for R&D projects. 
A) marginal cost of funds for R&D projects. 
B) marginal benefit of R&D projects. 
C) expected profitability of R&D projects. 
D) amount of funds the firm currently has for R&D projects.

Question 17

Creative destruction is

Accepted Answer

A) the process by which large firms buy up small firms. 
B) the process by which new firms and new products replace existing dominant firms and products. 
C) a term coined many years ago by Adam Smith. 
D) applicable to planned economies but not to market economies. 
A) the process by which large firms buy up small firms. 
B) the process by which new firms and new products replace existing dominant firms and products. 
C) a term coined many years ago by Adam Smith. 
D) applicable to planned economies but not to market economies.

Question 18

A firm's optimal amount of R&D occurs where the marginal benefit of this activity exceeds marginal cost by the greatest amount.

Accepted Answer

A) True 
 B)False

Question 19

Many economists view technological advance as mainly a response to profit opportunities arising within a capitalist economy, and not some random external force.

Accepted Answer

A) True 
 B)False

Question 20

The legal protection for publishers of books, computer software, movies, videos, and musical compositions from having their works used or copied by others without their permission is a

Accepted Answer

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

Exam 15: Technology, Rd, and Efficiency

"Intrapreneurs" is the term sometimes used to refer to

A consumer will buy a new product rather than an existing product

The discovery of a product or process through the use of imagination, ingenious thinking, and experimentation is

The marginal cost-of-funds curve for a firm shows the

Fast-second strategies are more likely to be used by

Which of the following would be the best example of a "start-up"?

The first discovery of the water-soluble material used in contact lenses is an example of

In the inverted-U theory of R&D, which of the following industry concentration ratios would be most conducive to R&D (as a percentage of firm sales)?

Joseph Schumpeter viewed capitalism as a process of "creative destruction" because

Suppose a firm anticipates that an R&D expenditure of $100 million will result in a new production process that will reduce costs and thus create a one-time added profit of $112 million a year later.The firm's expected rate of return is

The modern view of technological advance is that it

Process innovation will shift a firm's

Product innovation contributes to technological advance primarily by

Other things equal, the prospect of imitation by others

The retained earnings that corporations often use to finance R&D are also known as

The optimal amount of R&D for a firm depends on the following, except

Creative destruction is

A firm's optimal amount of R&D occurs where the marginal benefit of this activity exceeds marginal cost by the greatest amount.

Many economists view technological advance as mainly a response to profit opportunities arising within a capitalist economy, and not some random external force.

The legal protection for publishers of books, computer software, movies, videos, and musical compositions from having their works used or copied by others without their permission is a

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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