Question 1

Technological advance is shown as a(n)

Accepted Answer

A)  movement from a point inside a production possibilities curve to a point on the curve. 
B)  movement along a production possibilities curve. 
C)  outward shift of a production possibilities curve. 
D)  inward shift of a production possibilities curve. 
A)  movement from a point inside a production possibilities curve to a point on the curve. 
B)  movement along a production possibilities curve. 
C)  outward shift of a production possibilities curve. 
D)  inward shift of a production possibilities curve.

Question 2

When entrepreneurs use their own personal savings to finance the R&D for their new venture, the marginal cost of financing is zero.

Accepted Answer

A) True 
 B)False

Question 3

The profit-enhancing impact of product innovation tends to be on all of the following, except

Accepted Answer

A)  the firm's revenues. 
B)  the buyers' utility derived from the product. 
C)  the firm's cost of production. 
D)  the attractiveness of the product to buyers. 
A)  the firm's revenues. 
B)  the buyers' utility derived from the product. 
C)  the firm's cost of production. 
D)  the attractiveness of the product to buyers.

Question 4

Most product innovations consist of minor changes to existing products and are incremental improvements.

Accepted Answer

A) True 
 B)False

Question 5

What idea is best illustrated by the example of Alamo auto rentals offering unlimited mileage to drivers and the practice being adopted by other auto rental firms?

Accepted Answer

A)  start-ups 
B)  diffusion 
C)  invention 
D)  fast-second strategy 
A)  start-ups 
B)  diffusion 
C)  invention 
D)  fast-second strategy

Question 6

In exchange for a share of ZYX's profits if it succeeds, Firm ABC provides development funds to newly formed ZYX, which is developing an innovative product. ABC funds are called , while ZYX is known as a .

Accepted Answer

A)  venture capital; start-up 
B)  retained earnings; entrepreneurial firm 
C)  mutual funds; start-up 
D)  transfer payments; entrepreneurial firm 
A)  venture capital; start-up 
B)  retained earnings; entrepreneurial firm 
C)  mutual funds; start-up 
D)  transfer payments; entrepreneurial firm

Question 7

A legal protection for taking the lead in innovation is

Accepted Answer

A)  brand names. 
B)  trade secrets. 
C)  copyrights. 
D)  mergers. 
A)  brand names. 
B)  trade secrets. 
C)  copyrights. 
D)  mergers.

Question 8

The profit-enhancing impact of process innovation tends to be on all of the following, except

Accepted Answer

A)  the firm's TP or MP curves. 
B)  the firm's MR curve. 
C)  the firm's cost curves. 
D)  the firm's productivity. 
A)  the firm's TP or MP curves. 
B)  the firm's MR curve. 
C)  the firm's cost curves. 
D)  the firm's productivity.

Question 9

The marginal cost to a firm of R&D expenditures is the market interest rate the firm must pay to obtain the needed financing.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Product innovation contributes to technological advance primarily by

Accepted Answer

A)  decreasing allocative efficiency. 
B)  increasing allocative efficiency. 
C)  decreasing productive efficiency. 
D)  increasing productive efficiency. 
A)  decreasing allocative efficiency. 
B)  increasing allocative efficiency. 
C)  decreasing productive efficiency. 
D)  increasing productive efficiency.

Question 12

Kara's Kettles, Inc. has developed a new and improved type of cookware. Alex, a typical consumer, will necessarily purchase Kara's new product if his MU/P for the new cookware exceeds that of competing products.

Accepted Answer

A) True 
 B)False

Question 13

The retained earnings that corporations often use to finance R&D are also known as

Accepted Answer

A)  venture capital. 
B)  undistributed profits. 
C)  dividends. 
D)  mutual funds. 
A)  venture capital. 
B)  undistributed profits. 
C)  dividends. 
D)  mutual funds.

Question 14

In business, the abbreviation "R&D" refers to recreation and discovery.

Accepted Answer

A) True 
 B)False

Question 15

The process by which new firms and new products replace existing dominant firms and products is called

Accepted Answer

A)  monopolistic competition. 
B)  the inverted-U process. 
C)  process innovation. 
D)  creative destruction. 
A)  monopolistic competition. 
B)  the inverted-U process. 
C)  process innovation. 
D)  creative destruction.

Question 16

The modern view of technological advance is that it

Accepted Answer

A)  is rooted in the independent advance of science, an element largely external to the market system. 
B)  is rarely carried out by oligopolists or pure monopolists. 
C)  is an internal element of capitalism, occurring in response to profit incentives. 
D)  necessarily destroys existing monopoly power. 
A)  is rooted in the independent advance of science, an element largely external to the market system. 
B)  is rarely carried out by oligopolists or pure monopolists. 
C)  is an internal element of capitalism, occurring in response to profit incentives. 
D)  necessarily destroys existing monopoly power.

Question 17

Firm ABC designs and implements a lower-cost method of producing its product. This is an example of

Accepted Answer

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

Question 18

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure identical to his unique-action "MarFish" lure, whatever the competitor might name the lure. This legal protection is most likely to be a

Accepted Answer

A)  trademark. 
B)  restraining order. 
C)  patent. 
D)  copyright. 
A)  trademark. 
B)  restraining order. 
C)  patent. 
D)  copyright.

Question 19

Henry Ford's development of an assembly method for building cars and trucks would be an example of

Accepted Answer

A)  product improvement. 
B)  fast-second strategy. 
C)  process innovation. 
D)  inverted-U theory. 
A)  product improvement. 
B)  fast-second strategy. 
C)  process innovation. 
D)  inverted-U theory.

Question 20

The successful commercial introduction of a new product, the use of a new method, or the creation of a new form of business enterprise is called

Accepted Answer

A)  innovation. 
B)  invention. 
C)  creative destruction. 
D)  diffusion. 
A)  innovation. 
B)  invention. 
C)  creative destruction. 
D)  diffusion.

Exam 15: Technology, Rd, and Efficiency

Technological advance is shown as a(n)

When entrepreneurs use their own personal savings to finance the R&D for their new venture, the marginal cost of financing is zero.

The profit-enhancing impact of product innovation tends to be on all of the following, except

Most product innovations consist of minor changes to existing products and are incremental improvements.

What idea is best illustrated by the example of Alamo auto rentals offering unlimited mileage to drivers and the practice being adopted by other auto rental firms?

In exchange for a share of ZYX's profits if it succeeds, Firm ABC provides development funds to newly formed ZYX, which is developing an innovative product. ABC funds are called , while ZYX is known as a .

A legal protection for taking the lead in innovation is

The profit-enhancing impact of process innovation tends to be on all of the following, except

The marginal cost to a firm of R&D expenditures is the market interest rate the firm must pay to obtain the needed financing.

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

Product innovation contributes to technological advance primarily by

Kara's Kettles, Inc. has developed a new and improved type of cookware. Alex, a typical consumer, will necessarily purchase Kara's new product if his MU/P for the new cookware exceeds that of competing products.

The retained earnings that corporations often use to finance R&D are also known as

In business, the abbreviation "R&D" refers to recreation and discovery.

The process by which new firms and new products replace existing dominant firms and products is called

The modern view of technological advance is that it

Firm ABC designs and implements a lower-cost method of producing its product. This is an example of

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure identical to his unique-action "MarFish" lure, whatever the competitor might name the lure. This legal protection is most likely to be a

Henry Ford's development of an assembly method for building cars and trucks would be an example of

The successful commercial introduction of a new product, the use of a new method, or the creation of a new form of business enterprise is called

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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