Question 1

Technological advance increases productive efficiency by giving society a more preferred mix of goods.

Accepted Answer

A) True 
 B)False

Question 2

To maintain returns from research and development, firms

Accepted Answer

A)  sponsor start-ups.
B)  keep trade secrets.
C)  use a fast-second strategy.
D)  advocate creative destruction.E) None of the above
F) B) and C)

Question 3

Other things equal, patents

Accepted Answer

A)  decrease the expected rate of return on an R&D expenditure.
B)  increase the expected rate of return on an R&D expenditure.
C)  increase the interest-rate cost of funds used to finance an R&D expenditure.
D)  decrease the interest-rate cost of funds used to finance an R&D expenditure.E) None of the above
F) C) and D)

Question 4

A profit-maximizing firm should not undertake an R&D project for which the

Accepted Answer

A)  expected rate of return exceeds its interest-rate cost of funds.
B)  interest-rate cost of funds exceeds the expected rate of return.
C)  expected returns are in the distant future.
D)  expected returns, though potentially very large, are uncertain.E) All of the above
F) A) and B)

Question 5

U.S.business firms channel a majority of their R&D expenditures to scientific research.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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-upsE) A) and C)
F) B) and C)

Question 8

Process innovation raises the firm's total product curve and lowers its average total cost curve.

Accepted Answer

A) True 
 B)False

Question 9

Consumer acceptance of a new product depends on

Accepted Answer

A)  price alone.
B)  marginal utility alone.
C)  price and marginal utility.
D)  total utility divided by marginal utility.E) None of the above
F) B) and C)

Question 10

Suppose a firm anticipates that a particular R&D expenditure of $100 million will result in a new product and thus create a one-time added profit of $108 million a year later.The firm will

Accepted Answer

A)  undertake the R&D expenditure if its interest-rate cost of borrowing is 12 percent.
B)  undertake the R&D expenditure if its interest-rate cost of borrowing is 10 percent.
C)  not undertake the R&D expenditure if its interest-rate cost of borrowing is 9 percent.
D)  not undertake the R&D expenditure if its interest-rate cost of borrowing is 7 percent.E) B) and D)
F) A) and B)

Question 11

The legal protection that gives the original innovators of products the exclusive right to use a particular product name is a

Accepted Answer

A)  patent.
B)  copyright.
C)  brand name.
D)  trademark.E) All of the above
F) C) and D)

Question 12

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 firmE) None of the above
F) A) and D)

Question 13

An industry with which of the following four-firm concentration ratios would tend to have the greatest amount of R&D expenditures as a percentage of sales?

Accepted Answer

A)  0
B)  10
C)  50
D)  100E) All of the above
F) B) and C)

Question 14

All inventors are entrepreneurs.

Accepted Answer

A) True 
 B)False

Question 15

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.E) C) and D)
F) B) and D)

Question 16

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

Accepted Answer

A)  oligopoly
B)  pure monopoly
C)  conglomerates
D)  monopolistic competitionE) All of the above
F) A) and B)

Question 17

Which of the following does not aptly describe innovation?

Accepted Answer

A)  first commercial use of a new production process
B)  discovery of a new production method
C)  creation of a new form of business enterprise
D)  commercial introduction of a new productE) A) and B)
F) All of the above

Question 18

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 19

Technological advance may lead to new monopolies and may also destroy existing monopolies.

Accepted Answer

A) True 
 B)False

Question 20

In economists' models, technological advance occurs in

Accepted Answer

A)  the very long run.
B)  either the short run, long run, or very long run.
C)  manufacturing industries but not in service industries.
D)  pure competition but not in monopolistic competition, oligopoly, and pure monopoly.E) A) and D)
F) All of the above

Exam 15: Technology, Rd, and Efficiency

All inventors are entrepreneurs.

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Technological advance may lead to new monopolies and may also destroy existing monopolies.

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Other things equal, patents

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Suppose a firm anticipates that a particular R&D expenditure of $100 million will result in a new product and thus create a one-time added profit of $108 million a year later.The firm will

Correct AnswerverifiedShow Answer

A profit-maximizing firm should not undertake an R&D project for which the

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Which of the following are aptly considered entrepreneurs?

Correct AnswerverifiedShow Answer

Process innovation raises the firm's total product curve and lowers its average total cost curve.

Correct AnswerverifiedShow Answer

To maintain returns from research and development, firms

Correct AnswerverifiedShow Answer

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

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

Technological advance increases productive efficiency by giving society a more preferred mix of goods.

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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 .

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Which of the following does not aptly describe innovation?

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An industry with which of the following four-firm concentration ratios would tend to have the greatest amount of R&D expenditures as a percentage of sales?

Correct AnswerverifiedShow Answer

Consumer acceptance of a new product depends on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The legal protection that gives the original innovators of products the exclusive right to use a particular product name is a

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

In economists' models, technological advance occurs in

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U.S.business firms channel a majority of their R&D expenditures to scientific research.

Correct AnswerverifiedShow Answer

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