Question 1

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 responses to profit incentives.
D)   necessarily destroys existing monopoly power.E) A) and B)
F) A) and C)

Question 2

Innovation:

Accepted Answer

A)   is the first discovery of a product or process,rather than its first successful commercial introduction.
B)   includes new products but not new production methods.
C)   is also known as diffusion.
D)   can either increase or decrease the market share of a large firm,depending on whether it is introduced by the large firm or one of its competitors.E) All of the above
F) B) and C)

Question 3

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.E) C) and D)
F) A) and C)

Question 4

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.E) All of the above
F) None of the above

Question 5

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 6

Innovation is the first discovery of a new product or production process;invention is the first successful commercial introduction of the product or process.

Accepted Answer

A) True 
 B)False

Question 7

The first commercial introduction of transparent tape is an example of:

Accepted Answer

A)   innovation.
B)   invention.
C)   creative destruction.
D)   diffusion.E) None of the above
F) C) and D)

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

Suppose a firm anticipates that an R&D expenditure of $100 million will result in a new production process that will reduce costs and thus create a one-time added profit of $112 million a year later.The firm's expected rate of return is:

Accepted Answer

A)   0.12 percent.
B)   112 percent.
C)   12 percent.
D)   2 percent.E) A) and B)
F) All of the above

Question 10

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 11

Consumer's income = $12   Units of  Product  Marginal Utility, X ( Price =$1)  Marginal Utility, Y ( Price =$1)  Marginal Utility,  New Product, Z ( Price =$1)  First 121620 Second 101418 Third 81216 Fourth 61014 Fifth 4812 Sixth 2610 Seventh 048\begin{array}{l}\begin{array} { c c c c } \begin{array} { c } \\text { Units of } \\text { Product }\\hline\end{array} & \begin{array} { c } \\text { Marginal Utility, X } \( \text { Price } = \$ 1 ) \\hline\end{array} & \begin{array} { c } \\text { Marginal Utility, Y } \( \text { Price } = \$ 1 ) \\hline\end{array} & \begin{array} { c } \text { Marginal Utility, }\\text { New Product, Z } \( \text { Price } = \$ 1 ) \\hline\end{array} \ \text { First } & 12 & 16 & 20 \\text { Second } & 10 & 14 & 18 \\text { Third } & 8 & 12 & 16 \\text { Fourth } & 6 & 10 & 14 \\text { Fifth } & 4 & 8 & 12 \\text { Sixth } & 2 & 6 & 10 \\text { Seventh } & 0 & 4 & 8\end{array}\end{array} Units of  Product ​​ First  Second  Third  Fourth  Fifth  Sixth  Seventh ​ Marginal Utility, X ( Price =$1) ​​121086420​ Marginal Utility, Y ( Price =$1) ​​16141210864​ Marginal Utility,  New Product, Z ( Price =$1) ​​2018161412108​​  Refer to the data.Assume new product Z is introduced.How many units of Z will this consumer buy,given his or her $12 budget?

Accepted Answer

A)   Zero units.
B)   2 units.
C)   4 units.
D)   6 units. E) B) and C)
F) A) and D)

Question 12

The conjecture that R&D expenditures as a percentage of firms' sales first rise,reach a peak,and then fall as industry concentration rises is known as the:

Accepted Answer

A)   inverted-U theory of R&D.
B)   average product of R&D theory.
C)   bell-shaped-curve theory of product innovation.
D)   theory of increasing and diminishing returns.E) None of the above
F) All of the above

Question 13

Funds lent to start-up firms in return for shares of the profit if the firms succeed are called:

Accepted Answer

A)   retained earnings.
B)   time deposits.
C)   venture capital.
D)   transfer payments.E) C) and D)
F) A) and B)

Question 14

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure specifically named "MarFish." This legal protection is most likely to be a:

Accepted Answer

A)   trademark.
B)   restraining order.
C)   patent.
D)   copyright.E) A) and D)
F) A) and C)

Question 15

Which of the following correctly orders,highest to lowest,the relative magnitudes of U.S.spending by businesses on components of R&D?

Accepted Answer

A)   Invention,basic research,innovation.
B)   Invention,innovation,basic research.
C)   Innovation,invention,basic research.
D)   Basic research,invention,innovation.E) All of the above
F) B) and D)

Question 16

(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.E) A) and D)
F) B) and D)

Question 17

(Last Word) Which of the following best explains why most basic scientific research in the United States is financed by the government?

Accepted Answer

A)   Basic scientific research takes a long time to become commercially viable.
B)   Basic scientific research rarely results in commercially viable discoveries.
C)   Federal law limits basic scientific research because of potential national security threats.
D)   Private firms collectively spend far less on all types of R&D than the federal government.E) A) and B)
F) B) and D)

Question 18

Which of the following is a true statement?

Accepted Answer

A)   Innovation normally follows invention and precedes diffusion.
B)   Invention normally follows diffusion and precedes innovation.
C)   Diffusion normally follows invention and precedes innovation.
D)   Innovation normally follows diffusion and precedes invention.E) B) and D)
F) All of the above

Question 19

(Last Word) Many economists believe that the federal government:

Accepted Answer

A)   spends far too much on basic scientific research,as this activity should be reserved for the private sector.
B)   should spend more on basic scientific research because scientific knowledge is a public good with significant positive externalities.
C)   should conduct all R&D activity in the economy,limiting firms' ability to gain monopoly power through product innovation.
D)   should finance more consumption through Social Security and Medicare so that the increased demand encourages greater R&D.E) B) and D)
F) None of the above

Question 20

Diffusion is the first successful commercial introduction of a product,the use of a new method,or the creation of a new form of business enterprise.

Accepted Answer

A) True 
 B)False

Exam 14: Technology RD and Efficiency

Innovation is the first discovery of a new product or production process;invention is the first successful commercial introduction of the product or process.

Correct Answer
verified

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?

Correct Answer
verified

The conjecture that R&D expenditures as a percentage of firms' sales first rise,reach a peak,and then fall as industry concentration rises is known as the:

Correct Answer
verified

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.

Correct Answer
verified

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.

Correct Answer
verified

Innovation:

Correct Answer
verified

The modern view of technological advance is that it:

Correct Answer
verified

Funds lent to start-up firms in return for shares of the profit if the firms succeed are called:

Correct Answer
verified

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

Correct Answer
verified

(Last Word) Which of the following best explains why most basic scientific research in the United States is financed by the government?

Correct Answer
verified

Suppose a firm anticipates that an R&D expenditure of $100 million will result in a new production process that will reduce costs and thus create a one-time added profit of $112 million a year later.The firm's expected rate of return is:

Correct Answer
verified

Which of the following correctly orders,highest to lowest,the relative magnitudes of U.S.spending by businesses on components of R&D?

Correct Answer
verified

(Last Word) Many economists believe that the federal government:

Correct Answer
verified

The first commercial introduction of transparent tape is an example of:

Correct Answer
verified

Diffusion is the first successful commercial introduction of a product,the use of a new method,or the creation of a new form of business enterprise.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
verified

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure specifically named "MarFish." This legal protection is most likely to be a:

Correct Answer
verified

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

Correct Answer
verified

Exam 14: Technology RD and Efficiency

Innovation is the first discovery of a new product or production process;invention is the first successful commercial introduction of the product or process.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The conjecture that R&D expenditures as a percentage of firms' sales first rise,reach a peak,and then fall as industry concentration rises is known as the:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Innovation:

Correct AnswerverifiedShow Answer

The modern view of technological advance is that it:

Correct AnswerverifiedShow Answer

Funds lent to start-up firms in return for shares of the profit if the firms succeed are called:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

(Last Word) Which of the following best explains why most basic scientific research in the United States is financed by the government?

Correct AnswerverifiedShow Answer

Suppose a firm anticipates that an R&D expenditure of $100 million will result in a new production process that will reduce costs and thus create a one-time added profit of $112 million a year later.The firm's expected rate of return is:

Correct AnswerverifiedShow Answer

Which of the following correctly orders,highest to lowest,the relative magnitudes of U.S.spending by businesses on components of R&D?

Correct AnswerverifiedShow Answer

(Last Word) Many economists believe that the federal government:

Correct AnswerverifiedShow Answer

The first commercial introduction of transparent tape is an example of:

Correct AnswerverifiedShow Answer

Diffusion is the first successful commercial introduction of a product,the use of a new method,or the creation of a new form of business enterprise.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure specifically named "MarFish." This legal protection is most likely to be a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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