Question 1

Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.

Accepted Answer

A) True 
 B)False

Question 2

The presence of barriers to entry in innovation will ensure that profits from innovation are driven to zero.

Accepted Answer

A) True 
 B)False

Question 3

In their effort to contain the risks inherent in the innovation process, large business firms have tended to slant their efforts toward

Accepted Answer

A)   revolutionary breakthroughs.
B)   disruptive innovations.
C)   small incremental improvements.
D)   maintaining status quo.E) B) and D)
F) All of the above

Question 4

A firm will tend to follow competitors when they increase spending on R&D, but will not follow them when they decrease such spending.

Accepted Answer

A) True 
 B)False

Question 5

Firms that set prices equal to marginal costs will usually recover all of their R&D costs.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are examples of technology sharing except

Accepted Answer

A)   technology trading.
B)   cross licensing of patents.
C)   research joint ventures.
D)   applying for a patent.
E)   firms in an industry pooling resources to pay for R&D to develop a process innovation.F) A) and E)
G) C) and E)

Question 7

Which term refers to an arrangement that permits some economic variable to increase but prevents that variable from subsequently decreasing?

Accepted Answer

A)   Kink
B)   Interdependence
C)   Cartel
D)   Ratchet
E)   CollusionF) B) and C)
G) B) and D)

Question 8

Spending on R&D among a group of firms is equally likely to increase or to decrease.

Accepted Answer

A) True 
 B)False

Question 9

The Industrial Revolution refers to the period 1950-1970, which was characterized by rapid manufacturing sector growth in the United States.

Accepted Answer

A) True 
 B)False

Question 10

What is the difference between basic research and applied research? Which of these will firms have more incentive to invest in, and why?

Accepted Answer

Basic research is research that seeks to...

Question 11

Basic research is research

Accepted Answer

A)   whose goal is to invent or improve particular products.
B)   that seeks to come up with specific marketable inventions.
C)   whose goal is to invent or improve a particular process.
D)   that is not very complicated.
E)   that seeks to provide scientific knowledge and general principles.F) A) and C)
G) A) and E)

Question 12

Innovation tends to be an extremely competitive activity that allows few opportunities for firms to share information with one another.

Accepted Answer

A) True 
 B)False

Question 13

In the United States, the financing for innovation has been increasingly supplied by

Accepted Answer

A)   large oligopolistic enterprises.
B)   independent inventors
C)   newly founded entrepreneurial firms.
D)   small enterprises.E) None of the above
F) C) and D)

Question 14

In 2008, spending on research and innovation represented approximately 2.8 percent of total GDP.

Accepted Answer

A) True 
 B)False

Question 15

Capitalism is a market economic system with

Accepted Answer

A)   most production processes controlled by the government.
B)   most production processes controlled by private firms with minimal government control.
C)   all production processes controlled by private firms.
D)   all production processes controlled by the government.
E)   most production processes controlled by the government, with some control by private firms.F) C) and D)
G) All of the above

Question 16

Capitalism is an economic system in which there is public ownership of the means of production and resource allocation is determined through markets.

Accepted Answer

A) True 
 B)False

Question 17

A firm will generally believe that if it increases its spending on R&D its competitors will not follow, but if it decreases its spending they will follow.

Accepted Answer

A) True 
 B)False

Question 18

The unprecedented increase in living standards in the industrialized countries over the last two centuries is the result of

Accepted Answer

A)   growth in productivity of land.
B)   growth in labor productivity.
C)   growth in output.
D)   population growth.
E)   growth in government spending.F) B) and E)
G) D) and E)

Question 19

Capitalism is an economic system in which the production process is controlled primarily by private firms operating in markets.

Accepted Answer

A) True 
 B)False

Question 20

It required less labor time to buy a college education in 1995 than it did in 1965.

Accepted Answer

A) True 
 B)False

Exam 16: The Market's Prime Achievement: Innovation and Growth

In their effort to contain the risks inherent in the innovation process, large business firms have tended to slant their efforts toward

Correct AnswerverifiedShow Answer

The presence of barriers to entry in innovation will ensure that profits from innovation are driven to zero.

Correct AnswerverifiedShow Answer

The Industrial Revolution refers to the period 1950-1970, which was characterized by rapid manufacturing sector growth in the United States.

Correct AnswerverifiedShow Answer

Basic research is research

Correct AnswerverifiedShow Answer

In 2008, spending on research and innovation represented approximately 2.8 percent of total GDP.

Correct AnswerverifiedShow Answer

Which term refers to an arrangement that permits some economic variable to increase but prevents that variable from subsequently decreasing?

Correct AnswerverifiedShow Answer

Firms that set prices equal to marginal costs will usually recover all of their R&D costs.

Correct AnswerverifiedShow Answer

A firm will tend to follow competitors when they increase spending on R&D, but will not follow them when they decrease such spending.

Correct AnswerverifiedShow Answer

It required less labor time to buy a college education in 1995 than it did in 1965.

Correct AnswerverifiedShow Answer

The unprecedented increase in living standards in the industrialized countries over the last two centuries is the result of

Correct AnswerverifiedShow Answer

In the United States, the financing for innovation has been increasingly supplied by

Correct AnswerverifiedShow Answer

Innovation tends to be an extremely competitive activity that allows few opportunities for firms to share information with one another.

Correct AnswerverifiedShow Answer

All of the following are examples of technology sharing except

Correct AnswerverifiedShow Answer

A firm will generally believe that if it increases its spending on R&D its competitors will not follow, but if it decreases its spending they will follow.

Correct AnswerverifiedShow Answer

Capitalism is a market economic system with

Correct AnswerverifiedShow Answer

Capitalism is an economic system in which there is public ownership of the means of production and resource allocation is determined through markets.

Correct AnswerverifiedShow Answer

Capitalism is an economic system in which the production process is controlled primarily by private firms operating in markets.

Correct AnswerverifiedShow Answer

Spending on R&D among a group of firms is equally likely to increase or to decrease.

Correct AnswerverifiedShow Answer

Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.

Correct AnswerverifiedShow Answer

What is the difference between basic research and applied research? Which of these will firms have more incentive to invest in, and why?

Correct AnswerverifiedBasic research is research that seeks to...View AnswerShow Answer

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Basic research is research that seeks to...
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