Question 1

Define the following terms and explain what they have in common.
a.Technology trading
b.Cross licensing

Accepted Answer

a.Technology trading occurs under any ar

Question 2

Technology trading represents an attempt by firms to share the risks associated with innovation.

Accepted Answer

A) True 
 B)False

Question 3

Technology trading is an arrangement where firms are forced to provide their technology to other firms.

Accepted Answer

A) True 
 B)False

Question 4

A rationale for government financing of innovation and research activities is that private firms will not have an incentive to provide the socially optimal amount of these activities.

Accepted Answer

A) True 
 B)False

Question 5

Why do firms spend money on costly innovation?

Accepted Answer

A)  Competitive markets leave firms no choice but to innovate. 
B)  Innovation is a low-risk activity. 
C)  Innovation always results in higher profits for firms. 
D)  Innovation is usually profitable because the majority of innovations reach the market place. 
E)  Because innovation is beneficial for society and firms are motivated to act in ways that are beneficial for society. 
A)  Competitive markets leave firms no choice but to innovate. 
B)  Innovation is a low-risk activity. 
C)  Innovation always results in higher profits for firms. 
D)  Innovation is usually profitable because the majority of innovations reach the market place. 
E)  Because innovation is beneficial for society and firms are motivated to act in ways that are beneficial for society.

Question 6

The "new economy" refers to a world in which computer use is widespread, information is quickly transmitted, and technical change is rapid.

Accepted Answer

A) True 
 B)False

Question 7

What are the factors that contribute to productivity growth in the market economy and which of them is considered most important?

Accepted Answer

There are three oft-cited factors that c

Question 8

Which of the following contribute to productivity growth?

Accepted Answer

A)  the education and experience of the labor force. 
B)  investment in plants and equipment. 
C)  innovation resulting in new products. 
D)  innovation resulting in new processes. 
E)  All of the above are correct. 
A)  the education and experience of the labor force. 
B)  investment in plants and equipment. 
C)  innovation resulting in new products. 
D)  innovation resulting in new processes. 
E)  All of the above are correct.

Question 9

The computer industry is an example of an industry in which firms rely more heavily on product innovation than on price competition to gain an advantage in the market.

Accepted Answer

A) True 
 B)False

Question 10

Provide examples of efforts undertaken by large businesses to contain the risks inherent in the innovation process.

Accepted Answer

Large business firms have tended to slan

Question 11

An important factor contributing to the low average profits from innovation is the inherent riskiness of the activities.

Accepted Answer

A) True 
 B)False

Question 12

Patents are granted to provide incentives for private firms to innovate.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true?

Accepted Answer

A)  A steady flow of innovation means that GDP remains constant. 
B)  A steady flow of innovation is not enough to keep GDP constant. 
C)  An increasing flow of innovation is necessary for GDP to grow. 
D)  An increasing flow of innovation means that GDP remains constant. 
E)  A steady flow of innovation is all that is necessary for GDP to grow. 
A)  A steady flow of innovation means that GDP remains constant. 
B)  A steady flow of innovation is not enough to keep GDP constant. 
C)  An increasing flow of innovation is necessary for GDP to grow. 
D)  An increasing flow of innovation means that GDP remains constant. 
E)  A steady flow of innovation is all that is necessary for GDP to grow.

Question 14

A process innovation

Accepted Answer

A)  involves major modifications of earlier products. 
B)  involves changes the way in which a commodity is produced. 
C)  is the introduction of a good or service that is entirely new. 
D)  leads to an upward shift in the firm's average cost curve. 
A)  involves major modifications of earlier products. 
B)  involves changes the way in which a commodity is produced. 
C)  is the introduction of a good or service that is entirely new. 
D)  leads to an upward shift in the firm's average cost curve.

Question 15

The computer industry is an example of an industry with innovative activity characterized by zero economic profit.

Accepted Answer

A) True 
 B)False

Question 16

Invention alone does not explain why free market societies have experienced such rapid rates of economic growth.

Accepted Answer

A) True 
 B)False

Question 17

Spending on innovation will tend to be represented by a kinked marginal revenue curve.

Accepted Answer

A) True 
 B)False

Question 18

Innovation refers to the introduction of new products and processes into the market.

Accepted Answer

A) True 
 B)False

Question 19

It is probable that innovators, on average, earn zero profits or lose money.

Accepted Answer

A) True 
 B)False

Question 20

Globalization was much more pervasive in the 1800s than it is today.

Accepted Answer

A) True 
 B)False

Exam 16: The Market's Prime Achievement: Innovation and Growth

Define the following terms and explain what they have in common. a.Technology trading b.Cross licensing

Technology trading represents an attempt by firms to share the risks associated with innovation.

Technology trading is an arrangement where firms are forced to provide their technology to other firms.

A rationale for government financing of innovation and research activities is that private firms will not have an incentive to provide the socially optimal amount of these activities.

Why do firms spend money on costly innovation?

The "new economy" refers to a world in which computer use is widespread, information is quickly transmitted, and technical change is rapid.

What are the factors that contribute to productivity growth in the market economy and which of them is considered most important?

Which of the following contribute to productivity growth?

The computer industry is an example of an industry in which firms rely more heavily on product innovation than on price competition to gain an advantage in the market.

Provide examples of efforts undertaken by large businesses to contain the risks inherent in the innovation process.

An important factor contributing to the low average profits from innovation is the inherent riskiness of the activities.

Patents are granted to provide incentives for private firms to innovate.

Which of the following is true?

A process innovation

The computer industry is an example of an industry with innovative activity characterized by zero economic profit.

Invention alone does not explain why free market societies have experienced such rapid rates of economic growth.

Spending on innovation will tend to be represented by a kinked marginal revenue curve.

Innovation refers to the introduction of new products and processes into the market.

It is probable that innovators, on average, earn zero profits or lose money.

Globalization was much more pervasive in the 1800s than it is today.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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