Question 1

All inventors are entrepreneurs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following firms was not a "start-up"?

Accepted Answer

A)   Google
B)   Starbucks
C)   Apple
D)   Lucent TechnologiesE) A) and B)
F) All of the above

Question 3

Entrepreneurs are those people who are

Accepted Answer

A)   their own bosses.
B)   executive officers of corporations.
C)   salaried managers.
D)   working for research institutes.E) None of the above
F) B) and D)

Question 4

Which would be an example of innovation within an existing business firm?

Accepted Answer

A)   the development of Post-it note pads by the 3M Corporation
B)   the granting of a patent to a university researcher
C)   the formation of the start-up firm Amgen
D)   the merger of AOL and Time-WarnerE) A) and B)
F) None of the above

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

Question 6

A consumer had been consuming product X for some time. This period, she buys fewer X in order to try some units of a new product Y. She finds that her marginal utility of X is 20 (at a price of $10 per unit) , while the marginal utility of Y is 36 (at a price of $12) . The utility-maximizing rule suggests that this consumer should

Accepted Answer

A)   increase consumption of product X because of its lower price.
B)   increase consumption of product X because it is an old reliable product.
C)   increase consumption of product Y because it has a higher MU/P.
D)   increase consumption of product Y because it has a higher MU.E) A) and B)
F) A) and C)

Question 7

The major source of new scientific knowledge in the United States is

Accepted Answer

A)   university and government research.
B)   R&D work in large corporations.
C)   entrepreneurs working alone.
D)   purely competitive and monopolistically competitive firms.E) A) and D)
F) All of the above

Question 8

U.S. business firms channel a majority of their R&D expenditures to scientific research.

Accepted Answer

A) True 
 B)False

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

Product innovation will be successful only if it makes the product's

Accepted Answer

A)   marginal utility increase.
B)   price decrease.
C)   marginal-utility-to-price ratio increase.
D)   marginal-utility-to-price ratio decrease.E) A) and D)
F) A) and B)

Question 11

Legal protections against competitors producing and selling a product identical to the one you invented are called ; legal protections against competitors using your product's name are called .

Accepted Answer

A)   patents; trademarks
B)   trademarks; copyrights
C)   copyrights; patents
D)   trademarks; patentsE) B) and D)
F) None of the above

Question 12

Creative destruction is the situation where the creation of new products destroys the monopoly market positions of firms producing existing products.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)   invention.
B)   development.
C)   diffusion.
D)   applied research.E) None of the above
F) B) and C)

Question 14

The optimal amount of R&D for a firm depends on the following, except

Accepted Answer

A)   marginal cost of funds for R&D projects.
B)   marginal benefit of R&D projects.
C)   expected profitability of R&D projects.
D)   amount of funds the firm currently has for R&D projects.E) B) and C)
F) None of the above

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   trademark.
B)   restraining order.
C)   patent.
D)   copyright.E) None of the above
F) B) and D)

Question 17

A firm decides to make a $20 million expenditure on research and development that will create a new product. This product is expected to increase the firm's revenues by a total of $24 million in the next year. The firm also estimates that the production cost of the new product will be $22 million. What is the expected rate of return on this research and development expenditure?

Accepted Answer

A)   8.3 percent
B)   9.1 percent
C)   10 percent
D)   20 percentE) A) and B)
F) B) and C)

Question 18

One of the outcomes for society from product innovation is

Accepted Answer

A)   more concentration in industry.
B)   less scientific research.
C)   greater total utility.
D)   fewer mergers.E) B) and C)
F) A) and B)

Question 19

Which pair of market structures provides firms with the greatest ability to finance R&D out of retained earnings?

Accepted Answer

A)   oligopolists and pure monopolists
B)   pure competitors and pure monopolists
C)   pure competitors and monopolistic competitors
D)   monopolistic competitors and pure monopolistsE) C) and D)
F) A) and B)

Question 20

Suppose a firm anticipates that a particular R&D expenditure of $20 million will result in a new product and thus create a one-time added profit of $22 million a year later. The firm will

Accepted Answer

A)   not undertake the R&D expenditure if its interest-rate cost of borrowing is 8 percent.
B)   undertake the R&D expenditure if its interest-rate cost of borrowing is 12 percent.
C)   undertake the R&D expenditure if its interest-rate cost of borrowing is 20 percent.
D)   undertake the R&D expenditure if its interest-rate cost of borrowing is 9 percent.E) A) and D)
F) A) and B)

Exam 15: Technology, Rd, and Efficiency

Product innovation will be successful only if it makes the product's

Correct Answer
verified

Suppose a firm anticipates that a particular R&D expenditure of $20 million will result in a new product and thus create a one-time added profit of $22 million a year later. The firm will

Correct Answer
verified

Which of the following firms was not a "start-up"?

Correct Answer
verified

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

Correct Answer
verified

Which pair of market structures provides firms with the greatest ability to finance R&D out of retained earnings?

Correct Answer
verified

The optimal amount of R&D for a firm depends on the following, except

Correct Answer
verified

Correct Answer
verified

The major source of new scientific knowledge in the United States is

Correct Answer
verified

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

Correct Answer
verified

All inventors are entrepreneurs.

Correct Answer
verified

Legal protections against competitors producing and selling a product identical to the one you invented are called ; legal protections against competitors using your product's name are called .

Correct Answer
verified

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.

Correct Answer
verified

Which would be an example of innovation within an existing business firm?

Correct Answer
verified

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

Correct Answer
verified

U.S. business firms channel a majority of their R&D expenditures to scientific research.

Correct Answer
verified

Correct Answer
verified

Creative destruction is the situation where the creation of new products destroys the monopoly market positions of firms producing existing products.

Correct Answer
verified

One of the outcomes for society from product innovation is

Correct Answer
verified

Entrepreneurs are those people who are

Correct Answer
verified

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

Correct Answer
verified

Exam 15: Technology, Rd, and Efficiency

Product innovation will be successful only if it makes the product's

Correct AnswerverifiedShow Answer

Suppose a firm anticipates that a particular R&D expenditure of $20 million will result in a new product and thus create a one-time added profit of $22 million a year later. The firm will

Correct AnswerverifiedShow Answer

Which of the following firms was not a "start-up"?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which pair of market structures provides firms with the greatest ability to finance R&D out of retained earnings?

Correct AnswerverifiedShow Answer

The optimal amount of R&D for a firm depends on the following, except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The major source of new scientific knowledge in the United States is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All inventors are entrepreneurs.

Correct AnswerverifiedShow Answer

Legal protections against competitors producing and selling a product identical to the one you invented are called ; legal protections against competitors using your product's name are called .

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which would be an example of innovation within an existing business firm?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

U.S. business firms channel a majority of their R&D expenditures to scientific research.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Creative destruction is the situation where the creation of new products destroys the monopoly market positions of firms producing existing products.

Correct AnswerverifiedShow Answer

One of the outcomes for society from product innovation is

Correct AnswerverifiedShow Answer

Entrepreneurs are those people who are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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