Question 1

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 2

The process by which new firms and new products destroy existing dominant firms and their products is called creative destruction.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that Book-Cost Busters (BCB), without authorization, reproduced a best-selling novel and placed it for downloading on the BCB pay-for-use website. This action would violate the publisher's

Accepted Answer

A)  profit rights. 
B)  patent. 
C)  copyright. 
D)  trademark. 
A)  profit rights. 
B)  patent. 
C)  copyright. 
D)  trademark.

Question 4

Process innovation leads to technological advance because it

Accepted Answer

A)  decreases total product. 
B)  increases average total costs. 
C)  decreases productive efficiency. 
D)  increases productive efficiency. 
A)  decreases total product. 
B)  increases average total costs. 
C)  decreases productive efficiency. 
D)  increases productive efficiency.

Question 5

Technological advance improves productive efficiency by

Accepted Answer

A)  lowering average total cost. 
B)  increasing marginal utility. 
C)  enhancing monopoly power. 
D)  giving society a more-preferred mix of goods and services. 
A)  lowering average total cost. 
B)  increasing marginal utility. 
C)  enhancing monopoly power. 
D)  giving society a more-preferred mix of goods and services.

Question 6

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 7

Which of the following supports the contention that pure competitors have a weak 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)  In pure competition, products are already highly differentiated. 
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)  In pure competition, products are already highly differentiated. 
C)  Most purely competitive industries are increasing-cost industries. 
D)  Pure competitors are happy to earn only a normal profit.

Question 8

The interest-rate cost-of-funds curve is perfectly elastic because expected rates of return on R&D are constant.

Accepted Answer

A) True 
 B)False

Question 9

A "fast-second strategy" means that a dominant firm in an industry

Accepted Answer

A)  uses just-in-time inventory control methods to speed production. 
B)  cuts the development time for the introduction of a new product. 
C)  lets smaller firms initiate new products and then quickly imitates the success. 
D)  merges with the second largest firm in the industry to gain a larger market share. 
A)  uses just-in-time inventory control methods to speed production. 
B)  cuts the development time for the introduction of a new product. 
C)  lets smaller firms initiate new products and then quickly imitates the success. 
D)  merges with the second largest firm in the industry to gain a larger market share.

Question 10

According to the inverted-U theory, R&D expenditures as a percentage of sales tend to be relatively low in

Accepted Answer

A)  low-concentration industries only 
B)  high-concentration industries only 
C)  low- and high-concentration industries 
D)  low- to middle-concentration industries 
A)  low-concentration industries only 
B)  high-concentration industries only 
C)  low- and high-concentration industries 
D)  low- to middle-concentration industries

Question 11

As it relates to R&D, a firm's expected-rate-of-return-curve, r,

Accepted Answer

A)  slopes downward because the firm arrays, highest to lowest, the rates of return on R&D activities. 
B)  slopes upward because of the law of diminishing returns. 
C)  is a horizontal line. 
D)  depends on whether it borrows from the bank or uses retained earnings in financing R&D. 
A)  slopes downward because the firm arrays, highest to lowest, the rates of return on R&D activities. 
B)  slopes upward because of the law of diminishing returns. 
C)  is a horizontal line. 
D)  depends on whether it borrows from the bank or uses retained earnings in financing R&D.

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

The process by which new firms and new products destroy existing dominant firms and their products is called creative destruction.

Suppose that Book-Cost Busters (BCB), without authorization, reproduced a best-selling novel and placed it for downloading on the BCB pay-for-use website. This action would violate the publisher's

Process innovation leads to technological advance because it

Technological advance improves productive efficiency by

Creative destruction is

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

The interest-rate cost-of-funds curve is perfectly elastic because expected rates of return on R&D are constant.

A "fast-second strategy" means that a dominant firm in an industry

According to the inverted-U theory, R&D expenditures as a percentage of sales tend to be relatively low in

As it relates to R&D, a firm's expected-rate-of-return-curve, r,

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

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Exam 15: Technology, Rd, and Efficiency

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

The process by which new firms and new products destroy existing dominant firms and their products is called creative destruction.

Suppose that Book-Cost Busters (BCB), without authorization, reproduced a best-selling novel and placed it for downloading on the BCB pay-for-use website. This action would violate the publisher's

Process innovation leads to technological advance because it

Technological advance improves productive efficiency by

Creative destruction is

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

The interest-rate cost-of-funds curve is perfectly elastic because expected rates of return on R&D are constant.

A "fast-second strategy" means that a dominant firm in an industry

According to the inverted-U theory, R&D expenditures as a percentage of sales tend to be relatively low in

As it relates to R&D, a firm's expected-rate-of-return-curve, r,

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