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Exam 15: Technology, RD, and Efficiency

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Question 51

Multiple Choice

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Kodak introduced to the marketplace a digital camera that uses no film but takes photos that can be shown on personal computers. This is an example of

A) economies of scale.
B) product innovation.
C) process innovation.
D) venture capital.

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

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Question 52

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The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. Based on the information given, the optimal amount of R&D spending would be

A) $45 million.
B) $65 million.
C) $55 million.
D) $75 million.

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

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Question 53

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

Inventions and innovations can both be patented.

Entrepreneurs and innovative firms with past successes in developing products

How does innovation differ from invention and diffusion?

The inverted-U theory of R&D suggests that more R&D spending will be done by oligopolists than by firms producing in the other market structures.

The U.S. government has been increasing the portion of its budget and its spending on R&D activities, for the nation's long-term growth.

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?

Process innovation raises the firm's total product curve and lowers its average total cost curve.

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $3, and the price of good Y is $2. The budget of the consumer is $15. If the consumer buys both old product X and new product Y, how much will the consumer buy of each to maximize utility?

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

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $2, and the price of good Y is $1. The budget of the consumer is $10. If the consumer buys both old product X and new product Y, how much will the consumer buy of each to maximize utility?

Economists who contend that oligopolists have a strong incentive to engage in R&D say that

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?

Why is the percentage of business research and development spending for basic research so small?

Process innovation will shift a firm's

If an R&D activity is affordable, the firm should spend on that activity.

Compare and contrast the modern view of technological advance with the traditional view.

Discuss how technological advance can increase revenues with new product demand.