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Exam 15: Technology, RD, and Efficiency

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Question 71

Multiple Choice

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As it relates to the R&D decision, the interest-rate cost-of-funds curve

A) usually slopes downward.
B) is the marginal cost element in the MB = MC decision framework.
C) indicates a constant rate of return, r.
D) reflects the interest rate on bank loans but not the implicit interest rate on the use of retained earnings.

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

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Question 72

Multiple Choice

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The following are examples of innovative products in their respective industries, except

A) Nokia's smartphones.
B) Johnson & Johnson's disposable contact lenses.
C) Hewlett-Packard's scientific calculator.
D) Apple's iPhone.

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

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Question 73

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Innovation pertains to commercialization, while invention pertains more to scientific research.

If a firm improves its production method, this change will shift the firm's

"Intrapreneurs" is the term sometimes used to refer to

Entrepreneurs

The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds is 8 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $2, and the price of good Y is $1. The budget of the consumer is $10. When the consumer purchases the utility-maximizing combination of old product X and new product Y, total utility will be

A major source of funding of R&D in large, established corporations is

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

One of the advantages of being first to develop a new product is the opportunity to develop brand-name recognition.

Refer to the diagram, which relates to Firm X. Which of the following would illustrate process innovation by X?

Refer to the data for a consumer whose income = $12. Suppose the price of new product Z is $10 rather than $1. This consumer would purchase

When corporations use retained earnings to finance the R&D for a new venture, the marginal cost of financing is zero.

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

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

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $4, and the price of good Y is $3. The budget of the consumer is $18. What is the increase in total utility from the original situation when purchasing just X, compared to now when the consumer purchases the utility-maximizing combination of both X and Y?

In the inverted-U theory of R&D, which of the following industry concentration ratios would be most conducive to R&D (as a percentage of firm sales) ?

Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Originally the firm produced 2,000 units of output by combining its fixed capital with 200 units of labor and 500 units of raw materials. Now the firm changes its production process so that it can produce 3,000 units of output by combining its fixed capital with 100 units of labor and 500 units of raw materials. What happened to average total cost?

Firms have several sources of funds to finance their R&D activities, including the following, except