Question 1

The spread of an innovation to other products through imitation is called

Accepted Answer

A)  invention.
B)  development.
C)  diffusion.
D)  applied research.E) C) and D)
F) A) and B)

Question 2

The introduction of the iPhone by Apple is an example of a(n)

Accepted Answer

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

Question 3

When a dominant firm quickly copies the new product innovation of a smaller firm so that it is the next firm to make the innovation, it is following a

Accepted Answer

A)  venture capital strategy.
B)  retained earning strategy.
C)  fast-second strategy.
D)  start-up strategy.E) A) and B)
F) C) and D)

Question 4

As it relates to R&D, the imitation problem is that

Accepted Answer

A)  patents, copyrights, and trademarks hinder imitation and thus limit economically desirable diffusion.
B)  brand names create entry barriers for would-be competitors.
C)  diffusion of innovation occurs more slowly than is desirable from society's perspective.
D)  a firm's rivals may be able to copy its new product or process innovation, reducing the original firm's return on R&D.E) A) and B)
F) A) and C)

Question 5

Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that

Accepted Answer

A)  oligopolists have little incentive to introduce costly new technology and produce new products when they currently are earning large economic profit using existing technology and selling existing products.
B)  the undistributed profits of oligopolists give them a source of readily available, relatively low-cost funds for financing R&D.
C)  entry barriers enable oligopolists to sustain the profits they gain from innovation.
D)  the large size of oligopolists' R&D departments allows them to use very specialized, expensive R&D equipment and employ teams of specialized researchers.E) A) and B)
F) A) and C)

Question 6

The wide imitation and spread of an innovation is called

Accepted Answer

A)  innovation.
B)  invention.
C)  creative destruction.
D)  diffusion.E) A) and D)
F) All of the above

Question 7

Process innovation causes an upward shift in a firm's total product curve and

Accepted Answer

A)  a decrease in its average product.
B)  a downward shift in its average total cost curve.
C)  an upward shift in its average total cost curve.
D)  an upward shift in its marginal revenue curve.E) C) and D)
F) A) and D)

Question 8

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, leave the expected rate of return on the last dollar of R&D unchanged?

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 curveE) A) and C)
F) B) and C)

Question 9

Pure monopoly is the best market structure for encouraging R&D and innovation.

Accepted Answer

A) True 
 B)False

Question 10

Entrepreneurs

Accepted Answer

A)  include everyone engaged in R&D work.
B)  are located in small enterprises only.
C)  differ from other innovators because of the risks entrepreneurs must bear.
D)  work exclusively in government and university R&D laboratories.E) All of the above
F) A) and B)

Question 11

In the music industry, cassette tapes were replaced by compact discs, which in turn were replaced by the iPod and MP3 technology.This process would be an example of

Accepted Answer

A)  the inverted-U theory.
B)  creative destruction.
C)  diminishing marginal utility.
D)  the law of diminishing returns.E) A) and D)
F) A) and C)

Question 12

New scientific knowledge mainly comes from university and government laboratories, not private firms, because

Accepted Answer

A)  large corporations do not have funds available to channel toward basic research.
B)  government pays scientists higher salaries than do private firms.
C)  entrepreneurs find it difficult to secure venture capital to finance innovation.
D)  basic scientific principles, as such, cannot be patented and do not always have commercial applicability.E) B) and D)
F) B) and C)

Question 13

The spread of innovation through imitation refers to

Accepted Answer

A)  invention.
B)  diffusion.
C)  duplication.
D)  diversification.E) A) and B)
F) B) and D)

Question 14

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 strategyE) A) and C)
F) None of the above

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

Question 16

A legal protection for taking the lead in innovation is

Accepted Answer

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

Question 17

Why is the percentage of business research and development spending for basic research so small?

Accepted Answer

A)  Basic research is the sole responsibility of university research labs.
B)  Scientific knowledge has minimal effect on technological advance.
C)  Scientific principles cannot be easily patented or commercialized.
D)  Basic research is confusing and not well understood by business executives.E) A) and B)
F) None of the above

Question 18

What activity traditionally receives the largest share of total business spending on R&D in the U.S.?

Accepted Answer

A)  invention
B)  development
C)  basic research
D)  applied researchE) A) and B)
F) B) and C)

Question 19

Suppose firm X implements a new method for extracting copper from copper-bearing ore.This is an example of

Accepted Answer

A)  product innovation.
B)  process innovation.
C)  economics of scale.
D)  the inverted-U theory.E) A) and B)
F) B) and C)

Question 20

As related to businesses, the term "research and development" is used loosely to include direct efforts toward

Accepted Answer

A)  invention, innovation, and diffusion.
B)  basic research and applied research.
C)  laboratory research and business research.
D)  academic research and economic development.E) A) and B)
F) All of the above

Exam 15: Technology, Rd, and Efficiency

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

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As related to businesses, the term "research and development" is used loosely to include direct efforts toward

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The wide imitation and spread of an innovation is called

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Entrepreneurs

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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, leave the expected rate of return on the last dollar of R&D unchanged?

Correct AnswerverifiedShow Answer

In the music industry, cassette tapes were replaced by compact discs, which in turn were replaced by the iPod and MP3 technology.This process would be an example of

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Suppose firm X implements a new method for extracting copper from copper-bearing ore.This is an example of

Correct AnswerverifiedShow Answer

A legal protection for taking the lead in innovation is

Correct AnswerverifiedShow Answer

When a dominant firm quickly copies the new product innovation of a smaller firm so that it is the next firm to make the innovation, it is following a

Correct AnswerverifiedShow Answer

The spread of an innovation to other products through imitation is called

Correct AnswerverifiedShow Answer

New scientific knowledge mainly comes from university and government laboratories, not private firms, because

Correct AnswerverifiedShow Answer

As it relates to R&D, the imitation problem is that

Correct AnswerverifiedShow Answer

The spread of innovation through imitation refers to

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The introduction of the iPhone by Apple is an example of a(n)

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What activity traditionally receives the largest share of total business spending on R&D in the U.S.?

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Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that

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Pure monopoly is the best market structure for encouraging R&D and innovation.

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Why is the percentage of business research and development spending for basic research so small?

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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?

Correct AnswerverifiedShow Answer

Process innovation causes an upward shift in a firm's total product curve and

Correct AnswerverifiedShow Answer

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