Question 1

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure identical to his unique-action "MarFish" lure, whatever the competitor might name the lure. This legal protection is most likely to be a

Accepted Answer

A)   trademark.
B)   restraining order.
C)   patent.
D)   copyright.E) A) and B)
F) B) and D)

Question 2

Firm ABC designs and implements a lower-cost method of producing its product. This is an example of

Accepted Answer

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

Question 3

Technological advance is shown as a(n)

Accepted Answer

A)   movement from a point inside a production possibilities curve to a point on the curve.
B)   movement along a production possibilities curve.
C)   outward shift of a production possibilities curve.
D)   inward shift of a production possibilities curve.E) None of the above
F) A) and B)

Question 4

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

Accepted Answer

A)   the firm's TP or MP curves.
B)   the firm's MR curve.
C)   the firm's cost curves.
D)   the firm's productivity.E) A) and C)
F) None of the above

Question 5

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) None of the above

Question 6

The marginal cost to a firm of R&D expenditures is the market interest rate the firm must pay to obtain the needed financing.

Accepted Answer

A) True 
 B)False

Question 7

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) All of the above
F) B) and C)

Question 8

Product innovation contributes to technological advance primarily by

Accepted Answer

A)   decreasing allocative efficiency.
B)   increasing allocative efficiency.
C)   decreasing productive efficiency.
D)   increasing productive efficiency.E) A) and D)
F) None of the above

Question 9

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 10

The modern view of technological advance is that it

Accepted Answer

A)   is rooted in the independent advance of science, an element largely external to the market system.
B)   is rarely carried out by oligopolists or pure monopolists.
C)   is an internal element of capitalism, occurring in response to profit incentives.
D)   necessarily destroys existing monopoly power.E) A) and B)
F) A) and C)

Question 11

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) A) and D)
F) B) and D)

Question 12

When entrepreneurs use their own personal savings to finance the R&D for their new venture, the marginal cost of financing is zero.

Accepted Answer

A) True 
 B)False

Question 13

A legal protection for taking the lead in innovation is

Accepted Answer

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

Question 14

The retained earnings that corporations often use to finance R&D are also known as

Accepted Answer

A)   venture capital.
B)   undistributed profits.
C)   dividends.
D)   mutual funds.E) A) and B)
F) None of the above

Question 15

The successful commercial introduction of a new product, the use of a new method, or the creation of a new form of business enterprise is called

Accepted Answer

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

Question 16

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 C)

Question 17

In business, the abbreviation "R&D" refers to recreation and discovery.

Accepted Answer

A) True 
 B)False

Question 18

Henry Ford's development of an assembly method for building cars and trucks would be an example of

Accepted Answer

A)   product improvement.
B)   fast-second strategy.
C)   process innovation.
D)   inverted-U theory.E) None of the above
F) All of the above

Question 19

Which market structure is most likely to have the means and some incentive to innovate?

Accepted Answer

A)   oligopoly
B)   pure monopoly
C)   pure competition
D)   monopolistic competitionE) A) and C)
F) A) and D)

Question 20

Most product innovations consist of minor changes to existing products and are incremental improvements.

Accepted Answer

A) True 
 B)False

Exam 15: Technology, Rd, and Efficiency

The modern view of technological advance is that it

Correct AnswerverifiedShow Answer

A legal protection for taking the lead in innovation is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When entrepreneurs use their own personal savings to finance the R&D for their new venture, the marginal cost of financing is zero.

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

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

Correct AnswerverifiedShow Answer

Technological advance is shown as a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The marginal cost to a firm of R&D expenditures is the market interest rate the firm must pay to obtain the needed financing.

Correct AnswerverifiedShow Answer

Product innovation contributes to technological advance primarily by

Correct AnswerverifiedShow Answer

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

The retained earnings that corporations often use to finance R&D are also known as

Correct AnswerverifiedShow Answer

Most product innovations consist of minor changes to existing products and are incremental improvements.

Correct AnswerverifiedShow Answer

Firm ABC designs and implements a lower-cost method of producing its product. This is an example of

Correct AnswerverifiedShow Answer

Henry Ford's development of an assembly method for building cars and trucks would be an example of

Correct AnswerverifiedShow Answer

Which market structure is most likely to have the means and some incentive to innovate?

Correct AnswerverifiedShow Answer

In business, the abbreviation "R&D" refers to recreation and discovery.

Correct AnswerverifiedShow Answer

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure identical to his unique-action "MarFish" lure, whatever the competitor might name the lure. This legal protection is most likely to be a

Correct AnswerverifiedShow Answer

The successful commercial introduction of a new product, the use of a new method, or the creation of a new form of business enterprise is called

Correct AnswerverifiedShow Answer

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 .

Correct AnswerverifiedShow Answer

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