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Exam 15: Technology, Rd, and Efficiency

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Question 41

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The optimal market structure for technological advance seems to be an industry in which

A) most firms are purely competitive.
B) there is a natural monopoly with a large market for the product.
C) there are oligopolistic firms and several small and highly innovative firms.
D) the government provides some funding for research and development.

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

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Question 42

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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 improves 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 total cost?

A) TC increased by $2,000
B) TC decreased by $2,000
C) TC decreased by $4,000
D) TC remained unchanged

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

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Question 43

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

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

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 valid conclusion can be drawn about the effect and reasons for the change?

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

One of the outcomes for society from product innovation is

Diffusion is the first successful commercial introduction of a product, the use of a new method, or the creation of a new form of business enterprise.

(Consider This) Violin strings made from sheep intestines were first called "catgut" because

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.The firm improves 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 are the total cost and average cost of producing the 3,000 units of output?

If a firm develops better methods of producing a product, then this process innovation can be expected to result in a(n)

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

In 2014, which of the following nations ranked highest in total R&D expenditures as a percentage of GDP?

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

Suppose that a firm's legal staff concludes that a new product that the firm is developing is patentable.Graphically, this new information would shift the firm's expected-rate-of-return curve on R&D to the

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

The first discovery (as distinct from first commercial application) of a product or process is called

Invention and innovation are not the same; innovation tends be derived from invention.

A "fast-second strategy" refers to a situation where small competitors of a dominant firm will wait for the dominant firm to innovate, and then quickly imitate the dominant firm's innovations.

About what percentage of research and development spending by businesses in the United States in 2012 went to development (innovation and imitation) and about what percentage went to basic and applied research and invention, respectively?