Question 1

Under the U.S. patent system, a patent application must provide evidence that the invention works and that is based on another invention.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Spending on an education is considered an investment because it involves a sacrifice of current income for higher expected future income.

Accepted Answer

A) True 
 B)False

Question 4

The number of persons who could become lawyers or surgeons is potentially quite large, yet these two groups earn fairly high incomes. One of the main reasons why they do is the

Accepted Answer

A) return on the investment of many years of training. 
B) evening-out of their low income during schooling. 
C) rent on their unique and rare talents. 
D) scarcity value of their abilities. 
A) return on the investment of many years of training. 
B) evening-out of their low income during schooling. 
C) rent on their unique and rare talents. 
D) scarcity value of their abilities.

Question 5

Small firms and entrepreneurs tend to focus on smaller, incremental improvements rather than revolutionary advances.

Accepted Answer

A) True 
 B)False

Question 6

The psychological rewards of inventing a new product generally result in ____ profits for entrepreneurs.

Accepted Answer

A) below average 
B) only average 
C) above average 
D) indeterminate 
A) below average 
B) only average 
C) above average 
D) indeterminate

Question 7

Figure 20-4
 
In Figure 20-4, which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 8

The income effect of higher wages leads workers to want to work more.

Accepted Answer

A) True 
 B)False

Question 9

A firm that reduces its research and development spending will expect competitor firms to reduce research and development spending as competition is reduced.

Accepted Answer

A) True 
 B)False

Question 10

Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.

Accepted Answer

A) True 
 B)False

Question 11

The percentage of work time lost due to strikes in the United States has been increasing over time.

Accepted Answer

A) True 
 B)False

Question 12

A minimum wage

Accepted Answer

A) increases the number of unskilled workers who are employed. 
B) increases wages to all unskilled workers. 
C) increases the wages paid to unskilled workers who are employed. 
D) increases cyclical unemployment. 
A) increases the number of unskilled workers who are employed. 
B) increases wages to all unskilled workers. 
C) increases the wages paid to unskilled workers who are employed. 
D) increases cyclical unemployment.

Question 13

Distinguish between invention and innovation.

Accepted Answer

Invention is the creation of new product

Question 14

Labor unions in the United States

Accepted Answer

A) tend to be more outspoken politically than those in Europe. 
B) have experienced steady declines in membership since the 1950s. 
C) tend to be more powerful in deregulated industries (e.g., airlines)than in regulated industries. 
D) universally support socialist principles. 
A) tend to be more outspoken politically than those in Europe. 
B) have experienced steady declines in membership since the 1950s. 
C) tend to be more powerful in deregulated industries (e.g., airlines)than in regulated industries. 
D) universally support socialist principles.

Question 15

The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto manufacturing companies can do nothing in response.

Accepted Answer

A) True 
 B)False

Question 16

There is only a small difference in wages between college graduates and workers who did not attend college.

Accepted Answer

A) True 
 B)False

Question 17

The U.S. government enacted minimum wage legislation to protect skilled workers.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following does not affect the marginal physical product of labor?

Accepted Answer

A) A worker's abilities and degree of work effort 
B) The amount of capital available per worker 
C) The technical know-how of the management of the firm 
D) An increase in wages 
A) A worker's abilities and degree of work effort 
B) The amount of capital available per worker 
C) The technical know-how of the management of the firm 
D) An increase in wages

Question 19

Expenditures for attending college can be viewed as an investment in human capital.

Accepted Answer

A) True 
 B)False

Question 20

Most entrepreneurs are self-employed.

Accepted Answer

A) True 
 B)False

Exam 19: Labor and Entrepreneurship: the Human Inputs

Under the U.S. patent system, a patent application must provide evidence that the invention works and that is based on another invention.

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

Spending on an education is considered an investment because it involves a sacrifice of current income for higher expected future income.

The number of persons who could become lawyers or surgeons is potentially quite large, yet these two groups earn fairly high incomes. One of the main reasons why they do is the

Small firms and entrepreneurs tend to focus on smaller, incremental improvements rather than revolutionary advances.

The psychological rewards of inventing a new product generally result in ____ profits for entrepreneurs.

Figure 20-4 In Figure 20-4, which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

The income effect of higher wages leads workers to want to work more.

A firm that reduces its research and development spending will expect competitor firms to reduce research and development spending as competition is reduced.

Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.

The percentage of work time lost due to strikes in the United States has been increasing over time.

A minimum wage

Distinguish between invention and innovation.

Labor unions in the United States

The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto manufacturing companies can do nothing in response.

There is only a small difference in wages between college graduates and workers who did not attend college.

The U.S. government enacted minimum wage legislation to protect skilled workers.

Which of the following does not affect the marginal physical product of labor?

Expenditures for attending college can be viewed as an investment in human capital.

Most entrepreneurs are self-employed.

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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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