Question 1

Venture capital is another name for retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

The optimal amount of R&D spending for the firm occurs where its expected return is equal to the interest-rate cost-of-funds to finance it.

Accepted Answer

A) True 
 B)False

Question 3

Gigantic Corporation follows a strategy of waiting for rivals to innovate, then quickly imitating any successful innovations. This behavior is known as

Accepted Answer

A)   collusion.
B)   an entrepreneurial strategy.
C)   a fast-second strategy.
D)   pricing the demand curve.E) B) and D)
F) None of the above

Question 4

Venture capital refers to

Accepted Answer

A)   equipment and factories.
B)   financing for start-ups.
C)   entrepreneurs who start businesses.
D)   creative destruction in capitalism.E) None of the above
F) B) and D)

Question 5

R&D spending decisions by firms are complicated because they involve having to compare present expenditures against future expected gains.

Accepted Answer

A) True 
 B)False

Question 6

The major impact of product innovation tends to be on the firms' revenues, while that of process innovation tends to be on costs.

Accepted Answer

A) True 
 B)False

Question 7

The marginal benefit to a firm from its R&D expenditures is depicted by its

Accepted Answer

A)   interest-rate cost-of-funds curve.
B)   expected-rate-of-return curve.
C)   venture capital acquisition curve.
D)   retained earnings payout curve.E) All of the above
F) None of the above

Question 8

The expected-rate-of-return curve for R&D expenditures of a firm slopes downward because of

Accepted Answer

A)   diminishing marginal returns from R&D activities.
B)   economies of scale in R&D projects.
C)   average fixed costs of R&D projects.
D)   the law of supply for R&D expenditures.E) A) and D)
F) A) and B)

Question 9

The traditional view of technological advance was that it

Accepted Answer

A)   was a random external force to which the economy adjusted.
B)   arose largely from advances in military-related research.
C)   was the result of capitalism and the rivalry among firms.
D)   arose from international trade and the sharing of ideas among nations.E) B) and C)
F) A) and C)

Question 10

The worldwide duration of patents that begins at the time of application is

Accepted Answer

A)   10 years.
B)   1 year.
C)   20 years.
D)   50 years.E) None of the above
F) B) and D)

Question 11

Many economists view technological advance as mainly a response to profit opportunities arising within a capitalist economy, and not some random external force.

Accepted Answer

A) True 
 B)False

Question 12

A patent on a new product benefits the firm securing it by

Accepted Answer

A)   limiting the direct imitation of the product by rivals for many years.
B)   enabling the firm to retain "trade secrets" about the product.
C)   reducing the firm's legal expenses.
D)   increasing the speed of diffusion of the new product.E) B) and D)
F) None of the above

Question 13

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) C) and D)
F) A) and D)

Question 14

An amount of R&D spending that is greater than the optimal amount indicates that the

Accepted Answer

A)   marginal benefit of R&D expenditures is equal to the marginal cost.
B)   marginal benefit of R&D expenditures is greater than the marginal cost.
C)   interest-rate cost-of-funds is less than the expected rate of return.
D)   interest-rate cost-of-funds is greater than the expected rate of return.E) A) and B)
F) C) and D)

Question 15

Which of the following would be the best example of a "start-up"?

Accepted Answer

A)   the formation of Imation by the 3Com Corporation
B)   the founding of Apple by Jobs and Wozniak
C)   the buyout of McCaw Communications by AT&T
D)   the sale of a license by IBM to Dell computersE) B) and D)
F) A) and D)

Question 16

(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) A) and D)
F) A) and C)

Question 17

The role of entrepreneurs includes all of the following, except

Accepted Answer

A)   forming start-up businesses.
B)   getting hired as the top executive of an established company.
C)   exploiting university and government scientific research.
D)   anticipating the future in pursuit of both monetary and nonmonetary rewards.E) A) and B)
F) A) and C)

Question 18

The following can increase the profits of an innovating firm, except

Accepted Answer

A)   new product introductions.
B)   existing product improvements.
C)   imitation of its innovation by other firms.
D)   successful process innovations.E) A) and C)
F) B) and D)

Question 19

"Intrapreneurs" is the term sometimes used to refer to

Accepted Answer

A)   entrepreneurs who are initiators and risk bearers.
B)   business people who pool their financial resources to pursue a business idea.
C)   individuals who work as their own bosses.
D)   salaried employees engaged in R&D activities in existing companies.E) B) and C)
F) All of the above

Question 20

When economists view technological change as internal to the economy, they mean that it

Accepted Answer

A)   occurs randomly.
B)   occurs accidentally.
C)   arises deliberately from the profit motive and competition.
D)   arises mainly from government subsidies.E) C) and D)
F) B) and D)

Exam 15: Technology, Rd, and Efficiency

When economists view technological change as internal to the economy, they mean that it

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Other things equal, patents

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Venture capital refers to

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Venture capital is another name for retained earnings.

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The role of entrepreneurs includes all of the following, except

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"Intrapreneurs" is the term sometimes used to refer to

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A patent on a new product benefits the firm securing it by

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The worldwide duration of patents that begins at the time of application is

Correct AnswerverifiedShow Answer

(Last Word) Many economists believe that the federal government

Correct AnswerverifiedShow Answer

Gigantic Corporation follows a strategy of waiting for rivals to innovate, then quickly imitating any successful innovations. This behavior is known as

Correct AnswerverifiedShow Answer

The traditional view of technological advance was that it

Correct AnswerverifiedShow Answer

Many economists view technological advance as mainly a response to profit opportunities arising within a capitalist economy, and not some random external force.

Correct AnswerverifiedShow Answer

The major impact of product innovation tends to be on the firms' revenues, while that of process innovation tends to be on costs.

Correct AnswerverifiedShow Answer

An amount of R&D spending that is greater than the optimal amount indicates that the

Correct AnswerverifiedShow Answer

The optimal amount of R&D spending for the firm occurs where its expected return is equal to the interest-rate cost-of-funds to finance it.

Correct AnswerverifiedShow Answer

The marginal benefit to a firm from its R&D expenditures is depicted by its

Correct AnswerverifiedShow Answer

R&D spending decisions by firms are complicated because they involve having to compare present expenditures against future expected gains.

Correct AnswerverifiedShow Answer

The following can increase the profits of an innovating firm, except

Correct AnswerverifiedShow Answer

Which of the following would be the best example of a "start-up"?

Correct AnswerverifiedShow Answer

The expected-rate-of-return curve for R&D expenditures of a firm slopes downward because of

Correct AnswerverifiedShow Answer

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