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1. Digital Study Guide, written by William Walstad
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After reading this chapter, you should be able to:

1. Differentiate between invention, innovation, and technological diffusion.
2. Explain how entrepreneurs and other innovators further technological advance.
3. Summarize how a firm determines its optimal amount of research and development (R&D).
4. Relate why firms can benefit from their innovation even though rivals have an incentive to imitate it.
5. Discuss the role of market structure in promoting technological advance.
6. Show technological advance enhances productive efficiency and allocative efficiency.