Economics (McConnell), AP* Edition, 20th Edition

Chapter 13W : Technology, R&D, and Efficiency

*True or False

1
Technological advance consists of new and improved goods and services and new and improved production or distribution processes.
A)True
B)False
2
In economists' models, technological advance occurs in the short run, not the long run.
A)True
B)False
3
Invention is the first successful commercial introduction of a new product.
A)True
B)False
4
Firms channel a majority of their R&D expenditures to innovation and imitation rather than to basic scientific research.
A)True
B)False
5
Historically, most economists viewed technological advance as a predictable and internal force to which the economy adjusted.
A)True
B)False
6
The modern view of economists is that capitalism is the driving force of technological advance and such advance occurs in response to profit incentives within the economy.
A)True
B)False
7
The entrepreneur is an innovator but not a risk bearer.
A)True
B)False
8
Start-ups are small companies focused on creating and introducing a new product or using a new production or distribution technique.
A)True
B)False
9
The only innovators are entrepreneurs.
A)True
B)False
10
The market entrusts the production of goods and services to businesses that have consistently succeeded in fulfilling consumer wants.
A)True
B)False
11
Research and development rarely occur outside the labs of major corporations.
A)True
B)False
12
When entrepreneurs use personal savings to finance the R&D for a new venture, the marginal cost of financing is zero.
A)True
B)False
13
The optimal amount of R&D spending for the firm occurs where its expected return is greater than its interest-rate cost of funds to finance it.
A)True
B)False
14
Most firms are guaranteed a profitable outcome when making an R&D expenditure because the decisions are carefully evaluated.
A)True
B)False
15
A new product succeeds when it provides consumers with higher marginal utility per dollar spent than do existing products.
A)True
B)False
16
Most product innovations consist of major changes to existing products and are not incremental improvements.
A)True
B)False
17
Process innovation increases the firm's total product, lowers its average total cost, and increases its profit.
A)True
B)False
18
Imitation poses no problems for innovators because there are patent and trademark protections for their innovations.
A)True
B)False
19
A fast-second strategy involves letting the dominant firm set the price of the product and then smaller firms quickly undercutting that price.
A)True
B)False
20
Pure competition is the best market structure for encouraging R&D and innovation.
A)True
B)False
21
One major shortcoming of monopolistic competition in promoting technological progress is its limited ability to secure inexpensive financing for R&D.
A)True
B)False
22
The inverted-U theory of R&D suggests that R&D effort is strongest in very low-concentration industries and weakest in very high-concentration industries.
A)True
B)False
23
The technical and scientific characteristics of an industry may be more important than its structure in determining R&D spending and innovation.
A)True
B)False
24
Technological advance enhances productive efficiency but not allocative efficiency.
A)True
B)False
25
Creative destruction is the process the inventor goes through in developing new products and innovations.
A)True
B)False
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