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| 1 | |
Suppose a newly approved treaty expands the number of countries that promise to actively reduce the extent of piracy and copyright infringement within their borders. This will: |
| | A) | increase the interest-rate cost of funds used to finance R&D expenditures. |
| | B) | decrease the interest-rate cost of funds used to finance R&D expenditures. |
| | C) | decrease the expected rate of return on R&D expenditures. |
| | D) | increase the expected rate of return on R&D expenditures. |
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| 2 | |
Suppose a firm anticipates that $50 million of R&D expenditure this year will result in a less costly assembly process. If the firm expects a one-time increase in profits of $54 million one year from now, its expected rate of return is: |
| | A) | 0.04% |
| | B) | 8% |
| | C) | 108% |
| | D) | 4% |
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| 3 | |
If a firm profitably replaces its aging assembly equipment with more productive equipment: |
| | A) | both its total product curve and its average total cost curve will shift downward |
| | B) | its average total cost curve will shift downward and the firm will move upward along its fixed total product curve |
| | C) | its total product curve will shift downward and the firm will move downward along its fixed average total cost curve |
| | D) | its total product curve will shift upward and its average total cost curve will shift downward |
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| 4 | |
Undistributed corporate profits: |
| | A) | have been outlawed by recent legislation brought about by the corporate scandals of 2001 |
| | B) | have a higher interest-rate-cost-of-funds than bonds |
| | C) | are also known as retained earnings |
| | D) | may not legally be used for research and development |
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| 5 | |
The three major processes that make up technological advance include all of the following except: |
| | A) | invention |
| | B) | patent |
| | C) | innovation |
| | D) | diffusion |
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| 6 | |
Which of the following is an example of an innovation? |
| | A) | Several students write programming code that can be used to conduct on-line auctions |
| | B) | Pierre Omidyar uses the code to create the internet auction site eBay |
| | C) | Omidyar hires a support staff and gets funding from Benchmark Capital, a venture capital firm, that allows the firm to expand its on-line services |
| | D) | Other internet auction sites attempt to copy the success of eBay |
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| 7 | |
Provided there is no monopoly restriction of output, technological advance improves: |
| | A) | both productive and allocative efficiency |
| | B) | allocative but not productive efficiency |
| | C) | productive but not allocative efficiency |
| | D) | neither productive nor allocative efficiency |
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| 8 | |
Use the following information to answer the next question.
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Refer to the table. Suppose each good carries a price of $2, and the consumer's income is $18. In equilibrium, the introduction of the new product Z will increase this consumer's total utility by: |
| | A) | 18 utils |
| | B) | 22 utils |
| | C) | 33 utils |
| | D) | 38 utils |
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| 9 | |
The key characteristic of an entrepreneur, as opposed to others in the firm who also innovate, is that only the entrepreneur: |
| | A) | also invents |
| | B) | bears the financial risk of the innovation |
| | C) | is an individual and not a team |
| | D) | engages in basic scientific research |
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| 10 | |
As embodied in product innovation, technological advance will: |
| | A) | not affect allocative efficiency |
| | B) | improve allocative efficiency by lowering average total cost |
| | C) | improve allocative efficiency provided there is no creative destruction |
| | D) | improve allocative efficiency provided the innovation does not give rise to monopoly power |
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