Question 1

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 2

A firm should increase the amount of R&D expenditures to

Accepted Answer

A) the maximum amount of funding that is available to the firm. 
B) the point where the expected return equals the cost of funds. 
C) a critical minimum level so that the firm can remain competitive. 
D) a point where the difference between the expected return and the cost of funds is at a maximum. 
A) the maximum amount of funding that is available to the firm. 
B) the point where the expected return equals the cost of funds. 
C) a critical minimum level so that the firm can remain competitive. 
D) a point where the difference between the expected return and the cost of funds is at a maximum.

Question 3

Which would be a good example of a successful introduction of a new product?

Accepted Answer

A) McDonald's McLean burger 
B) Microsoft Windows 
C) Kodak disc cameras 
D) New Coke by Coca-Cola 
A) McDonald's McLean burger 
B) Microsoft Windows 
C) Kodak disc cameras 
D) New Coke by Coca-Cola

Question 4

When a dominant firm quickly copies the new product innovation of a smaller firm so that it is the next firm to make the innovation, it is following a

Accepted Answer

A) venture capital strategy. 
B) retained earning strategy. 
C) fast-second strategy. 
D) start-up strategy. 
A) venture capital strategy. 
B) retained earning strategy. 
C) fast-second strategy. 
D) start-up strategy.

Question 5

The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. If interest-rate cost-of-funds rose to 11, the optimal amount of R&D spending would be

Accepted Answer

A) $35 million. 
B) $45 million. 
C) $55 million. 
D) $75 million. 
A) $35 million. 
B) $45 million. 
C) $55 million. 
D) $75 million.

Question 6

What is venture capital?

Accepted Answer

Venture capital is that part o

Question 7

The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. If interest-rate cost-of-funds rose to 11, the optimal amount of R&D spending would be

Accepted Answer

A) $35 million. 
B) $45 million. 
C) $55 million. 
D) $75 million. 
A) $35 million. 
B) $45 million. 
C) $55 million. 
D) $75 million.

Question 8

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

Accepted Answer

A) nuclear energy 
B) Scotch tape 
C) Thinsulate insulation 
D) Post-it note pads 
A) nuclear energy 
B) Scotch tape 
C) Thinsulate insulation 
D) Post-it note pads

Question 9

All of the following increase the expected rate of return on R&D expenditures except

Accepted Answer

A) patents. 
B) trademarks. 
C) imitation by others. 
D) trade secrets. 
A) patents. 
B) trademarks. 
C) imitation by others. 
D) trade secrets.

Question 10

In the graph, the difference between points a and b indicates that at $10M of R&D spending, the

Accepted Answer

A) marginal cost is greater than the marginal benefit. 
B) marginal benefit is greater than the marginal cost. 
C) interest-rate cost-of-funds is equal to the expected rate of return. 
D) interest-rate cost-of-funds is greater than the expected rate of return. 
A) marginal cost is greater than the marginal benefit. 
B) marginal benefit is greater than the marginal cost. 
C) interest-rate cost-of-funds is equal to the expected rate of return. 
D) interest-rate cost-of-funds is greater than the expected rate of return.

Question 11

Which market structure is most likely to have the means and some incentive to innovate?

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 12

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

Question 13

Refer to the data for a consumer whose income = $16. Suppose the price of new product Z is $2 rather than $1. This consumer would purchase

Accepted Answer

A) three units of Z. 
B) four units of Z. 
C) two units of Z. 
D) more of X, Y, and Z than if the price were $1 for Z. 
A) three units of Z. 
B) four units of Z. 
C) two units of Z. 
D) more of X, Y, and Z than if the price were $1 for Z.

Question 14

In 2017, the following firms were among the top 5 in terms of securing the most U.S. patents, except

Accepted Answer

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

Question 15

Refer to the data for a utility-maximizing consumer whose income = $12. Assume that new product Z doesn't exist. How many units of X and Y will this consumer buy, given his or her $12 budget?

Accepted Answer

A) 5 of X and 7 of Y 
B) 7 of X and 5 of Y 
C) 6 of X and 6 of Y 
D) 5 of X and 6 of Y 
A) 5 of X and 7 of Y 
B) 7 of X and 5 of Y 
C) 6 of X and 6 of Y 
D) 5 of X and 6 of Y

Question 16

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $2, and the price of good Y is $1. The budget of the consumer is $10. If the consumer can only buy old product X, how much will the consumer buy and what will be the total utility from spending the given budget?

Accepted Answer

A) 4X and 52 
B) 4X and 10 
C) 5X and 8 
D) 5X and 60 
A) 4X and 52 
B) 4X and 10 
C) 5X and 8 
D) 5X and 60

Question 17

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 18

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 19

What ways do firms have to finance R&D activities? What is the cost of these forms of funding?

Accepted Answer

The ways that firm can obtain the funds

Question 20

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic. Which of the following would increase a firm's optimal R&D expenditures and, in equilibrium, reduce 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

Exam 15: Technology, RD, and Efficiency

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

A firm should increase the amount of R&D expenditures to

Which would be a good example of a successful introduction of a new product?

When a dominant firm quickly copies the new product innovation of a smaller firm so that it is the next firm to make the innovation, it is following a

The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. If interest-rate cost-of-funds rose to 11, the optimal amount of R&D spending would be

What is venture capital?

The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. If interest-rate cost-of-funds rose to 11, the optimal amount of R&D spending would be

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

All of the following increase the expected rate of return on R&D expenditures except

In the graph, the difference between points a and b indicates that at $10M of R&D spending, the

Which market structure is most likely to have the means and some incentive to innovate?

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

Refer to the data for a consumer whose income = $16. Suppose the price of new product Z is $2 rather than $1. This consumer would purchase

In 2017, the following firms were among the top 5 in terms of securing the most U.S. patents, except

Refer to the data for a utility-maximizing consumer whose income = $12. Assume that new product Z doesn't exist. How many units of X and Y will this consumer buy, given his or her $12 budget?

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

Entrepreneurs differ from other innovators because they

What ways do firms have to finance R&D activities? What is the cost of these forms of funding?

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic. Which of the following would increase a firm's optimal R&D expenditures and, in equilibrium, reduce the expected rate of return on the last dollar of R&D?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters