 |
| 1 | |
Use the following table to answer the next question.
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/1113273090/384259/quiz24c_1.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (9.0K)</a>]]>
Refer to the above data. If the interest rate cost of funds fell from 8.5% to 6.5%, optimal R&D spending would: |
| | A) | fall by $10 million |
| | B) | fall by $20 million |
| | C) | increase by $10 million |
| | D) | increase by $20 million |
|
|
|
| 2 | |
Use the following information to answer the next question.
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/1113273090/384259/quiz24c_2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (11.0K)</a>]]>
Refer to the table. Suppose each good carries a price of $2, and the consumer's income is $18. Assume new product Z is introduced. How much of the new product will the consumer purchase? |
| | A) | 1 unit |
| | B) | 2 units |
| | C) | 3 units |
| | D) | 4 units |
|
|
|
| 3 | |
Consumers will purchase a newly introduced product if: |
| | A) | its marginal utility exceeds that of existing products |
| | B) | its marginal utility per dollar exceeds that of existing products |
| | C) | it sells for a lower price than existing products |
| | D) | it costs less to produce than existing products |
|
|
|
| 4 | |
Suppose a firm has total fixed costs of $5000. It initially employs 75 workers at $20 per hour and uses raw materials valued at $1500 to produce 1000 units per hour. If a successful process innovation allows it to produce the same output using only 50 workers, its: |
| | A) | total cost would decrease by $1000 |
| | B) | total cost would decrease by $50 |
| | C) | average total cost would decrease by $20 |
| | D) | average total cost would decrease by $.50 |
|
|
|
| 5 | |
The opportunity cost of using retained earnings to fund R&D expenditures is: |
| | A) | zero |
| | B) | equal to the prime rate |
| | C) | equal to the bond rate |
| | D) | equal to the interest rate it could earn on invested funds |
|
|
|
| 6 | |
An increase in the interest rate cost of funds will reduce the optimal amount of R&D spending. |
| | A) | True |
| | B) | False |
|
|
|
| 7 | |
The "destruction" in Joseph Schumpeter's view of creative destruction refers to destruction of: |
| | A) | incentives to innovate by monopoly firms |
| | B) | government support of R&D because of high corporate tax rates |
| | C) | markets for older goods caused by the introduction of newer goods |
| | D) | barriers to entry |
|
|
|
| 8 | |
The inverted-U theory suggests that the industry structure best suited to technological advance is: |
| | A) | pure competition |
| | B) | monopolistic competition |
| | C) | oligopoly |
| | D) | pure monopoly |
|
|
|
| 9 | |
U.S. firms collectively devote the largest portion of their total R&D spending on basic research. |
| | A) | True |
| | B) | False |
|
|
|
| 10 | |
Which of the following exemplifies a patent? |
| | A) | Polaroid receives protection from imitation of its instant image processing technologies |
| | B) | McConnell and Brue receive protection from unauthorized copying of their economics text |
| | C) | Toy maker Mattel receives exclusive right to use the name "Barbie" |
| | D) | KFC successfully keeps its 11 herbs and spices a secret |
|
|
.