Question 1

In choosing between an old reliable product and a new attractive product, the consumer will

Accepted Answer

A)  always buy the product with the lower price. 
B)  always buy the product with the higher MU. 
C)  buy the one with the higher MU-to-P ratio. 
D)  buy the one with the lower MU-to-P ratio. 
A)  always buy the product with the lower price. 
B)  always buy the product with the higher MU. 
C)  buy the one with the higher MU-to-P ratio. 
D)  buy the one with the lower MU-to-P ratio.

Question 2

A firm's marginal benefit from its R&D expenditures is the

Accepted Answer

A)  total amount spent on its R&D activities. 
B)  expected profit from the last dollar spent on R&D. 
C)  employment generated by the largest R&D project. 
D)  resources bought for all of its R&D activities. 
A)  total amount spent on its R&D activities. 
B)  expected profit from the last dollar spent on R&D. 
C)  employment generated by the largest R&D project. 
D)  resources bought for all of its R&D activities.

Question 3

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 4

The technical and scientific characteristics of an industry may be less important than its structure in determining R&D spending and innovation.

Accepted Answer

A) True 
 B)False

Question 5

Suppose firm X implements a new method for extracting copper from copper-bearing ore. This is an example of

Accepted Answer

A)  product innovation. 
B)  process innovation. 
C)  economics of scale. 
D)  the inverted-U theory. 
A)  product innovation. 
B)  process innovation. 
C)  economics of scale. 
D)  the inverted-U theory.

Question 6

R&D activities by government and universities have not been an important factor in fostering technological advance.

Accepted Answer

A) True 
 B)False

Question 7

The "inverted-U theory" of R&D shows the relationship between

Accepted Answer

A)  marginal benefit and marginal cost of R&D. 
B)  number of R&D projects and the sources of R&D funds. 
C)  R&D expenditures and expected return. 
D)  market concentration ratio and R&D expenditures. 
A)  marginal benefit and marginal cost of R&D. 
B)  number of R&D projects and the sources of R&D funds. 
C)  R&D expenditures and expected return. 
D)  market concentration ratio and R&D expenditures.

Question 8

According to the inverted-U theory of R&D, other things equal, firms in industries with concentration ratios around 10 percent will be more technologically progressive than firms in industries with 50 percent concentration ratios.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following supports the contention that pure competitors have a strong incentive to engage in R&D?

Accepted Answer

A)  Entry to purely competitive industries is easy, and thus profit from innovation is quickly competed away. 
B)  Pure competitors cannot risk being complacent about innovation because a new product, production technique, or distribution method could undermine their normal profit and drive them out of the market. 
C)  Most purely competitive industries are increasing-cost industries. 
D)  Pure competitors are happy to earn only a normal profit. 
A)  Entry to purely competitive industries is easy, and thus profit from innovation is quickly competed away. 
B)  Pure competitors cannot risk being complacent about innovation because a new product, production technique, or distribution method could undermine their normal profit and drive them out of the market. 
C)  Most purely competitive industries are increasing-cost industries. 
D)  Pure competitors are happy to earn only a normal profit.

Question 10

What activity traditionally receives the largest share of total business spending on R&D in the U.S.?

Accepted Answer

A)  invention 
B)  development 
C)  basic research 
D)  applied research 
A)  invention 
B)  development 
C)  basic research 
D)  applied research

Question 11

Which among the following is the strongest determinant of an industry's technological progressiveness?

Accepted Answer

A)  the scientific character of its industry and the number of technological opportunities available 
B)  the size of the industry concentration ratio-the lower the ratio, the greater the firm's technological progressiveness 
C)  the Herfindahl index in the firm's industry-the higher the index value, the greater the firm's technological progressiveness 
D)  the amount of retained earnings in the industry 
A)  the scientific character of its industry and the number of technological opportunities available 
B)  the size of the industry concentration ratio-the lower the ratio, the greater the firm's technological progressiveness 
C)  the Herfindahl index in the firm's industry-the higher the index value, the greater the firm's technological progressiveness 
D)  the amount of retained earnings in the industry

Question 12

Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Originally the firm produced 2,000 units of output by combining its fixed capital with 200 units of labor and 500 units of raw materials. Now the firm changes its production process so that it can produce 3,000 units of output by combining its fixed capital with 100 units of labor and 500 units of raw materials. What valid conclusion can be drawn about the effect and reasons for the change?

Accepted Answer

A)  It improved economic efficiency because more units could be produced at a lower ATC using the same amount of economic resources. 
B)  It improved economic efficiency because more units could be produced at a lower ATC using fewer economic resources. 
C)  It improved economic efficiency because more units could be produced at the same ATC using fewer economic resources. 
D)  It reduced economic efficiency because fewer units could be produced at a higher ATC using more economic resources. 
A)  It improved economic efficiency because more units could be produced at a lower ATC using the same amount of economic resources. 
B)  It improved economic efficiency because more units could be produced at a lower ATC using fewer economic resources. 
C)  It improved economic efficiency because more units could be produced at the same ATC using fewer economic resources. 
D)  It reduced economic efficiency because fewer units could be produced at a higher ATC using more economic resources.

Question 13

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 14

Which of the following statements is most accurate about business R&D spending in the United States?

Accepted Answer

A)  It is more or less equally distributed between innovation, invention, and basic research. 
B)  Well over half is dedicated to innovation and imitation. 
C)  The largest share is for basic research, as it provides the foundation, followed by invention and then innovation. 
D)  The majority is spent on applied research. 
A)  It is more or less equally distributed between innovation, invention, and basic research. 
B)  Well over half is dedicated to innovation and imitation. 
C)  The largest share is for basic research, as it provides the foundation, followed by invention and then innovation. 
D)  The majority is spent on applied research.

Question 15

(Last Word) The percentage of the U.S. federal budget spent on R&D has

Accepted Answer

A)  risen significantly over the past 50 years. 
B)  remained stable over the past 50 years. 
C)  declined substantially over the past 50 years. 
D)  risen dramatically in the past few years after a steady decline starting in 1980. 
A)  risen significantly over the past 50 years. 
B)  remained stable over the past 50 years. 
C)  declined substantially over the past 50 years. 
D)  risen dramatically in the past few years after a steady decline starting in 1980.

Question 16

Consumers will buy a new product instead of an old one that they are used to buying, if the MU of the new product is larger than the MU of the old product.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Other things equal, trademarks and brand names

Accepted Answer

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

Question 19

The outcomes from R&D expenditures by firms are

Accepted Answer

A)  always profitable for the firms, if they have the funds available. 
B)  the most costly use of funds by the firm. 
C)  subject to economies of scale. 
D)  expected, but not guaranteed. 
A)  always profitable for the firms, if they have the funds available. 
B)  the most costly use of funds by the firm. 
C)  subject to economies of scale. 
D)  expected, but not guaranteed.

Question 20

(Consider This) The central idea illustrated by the vignette on "catgut" used as violin strings is

Accepted Answer

A)  patent rights. 
B)  research and development activity. 
C)  derived demand. 
D)  trade secrets. 
A)  patent rights. 
B)  research and development activity. 
C)  derived demand. 
D)  trade secrets.

Exam 15: Technology, Rd, and Efficiency

In choosing between an old reliable product and a new attractive product, the consumer will

A firm's marginal benefit from its R&D expenditures is the

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

The technical and scientific characteristics of an industry may be less important than its structure in determining R&D spending and innovation.

Suppose firm X implements a new method for extracting copper from copper-bearing ore. This is an example of

R&D activities by government and universities have not been an important factor in fostering technological advance.

The "inverted-U theory" of R&D shows the relationship between

According to the inverted-U theory of R&D, other things equal, firms in industries with concentration ratios around 10 percent will be more technologically progressive than firms in industries with 50 percent concentration ratios.

Which of the following supports the contention that pure competitors have a strong incentive to engage in R&D?

What activity traditionally receives the largest share of total business spending on R&D in the U.S.?

Which among the following is the strongest determinant of an industry's technological progressiveness?

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

Which of the following statements is most accurate about business R&D spending in the United States?

(Last Word) The percentage of the U.S. federal budget spent on R&D has

Consumers will buy a new product instead of an old one that they are used to buying, if the MU of the new product is larger than the MU of the old product.

Which of the following are aptly considered entrepreneurs?

Other things equal, trademarks and brand names

The outcomes from R&D expenditures by firms are

(Consider This) The central idea illustrated by the vignette on "catgut" used as violin strings is

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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters