Question 1

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.E) A) and B)
F) B) and C)

Question 2

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

Question 3

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 industriesE) A) and C)
F) A) and B)

Question 4

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 5

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.E) A) and B)
F) A) and C)

Question 6

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.E) A) and B)
F) All of the above

Question 7

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

Question 8

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.E) None of the above
F) B) and D)

Question 9

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

Question 10

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

Question 11

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

Exam 15: Technology, Rd, and Efficiency

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

Correct Answer
verified

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

Correct Answer
verified

Technological advance improves productive efficiency by

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Process innovation leads to technological advance because it

Correct Answer
verified

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

Correct Answer
verified

Creative destruction is

Correct Answer
verified

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

Correct Answer
verified

Exam 15: Technology, Rd, and Efficiency

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Technological advance improves productive efficiency by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Process innovation leads to technological advance because it

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Creative destruction is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified