AP Microeconomics Chapter 12 Vocabulary

new and better goods and services or new and better ways of producing or distributing them.

is a period in which technology can change and in which firms can develop and offer entirely new products.

the discovery of a product or process through the use of imagination, ingenious thinking, and experimentation and the first proof that it will work. It is a process, and a result.

an exclusive right to sell any new and useful process, machine, or product for a set period of time.

is the first successful commercial introduction of a new product, the first use of a new method, or the creation of a new form of business enterprise, There are two forms.

one type of innovation that refers to new and improved products and services.

one type of innovation that refers to new and improved methods of production or distribution.

is the spread of an innovation through imitation or copying.

are small new companies that focus on creating and introducing a new product or employing a new production or distribution technique.

is financial capital, or simply money, not real capital.

a curve showing the interest rate the firm must pay to obtain any particular amount of funds to finance R&D.

a curve showing the anticipated gain in profit, as a percentage of R&D expenditure, from an additional dollar spent on R&D.

the level of R&D at which the marginal benefit and marginal cost of R&D expenditures are equal.

a firm's rivals may be able to imitate its new product or process, greatly reducing the originator's profit from its R&D effort.

the dominant firm counts on its own product-improvement abilities, marketing prowess, or economies or scale to prevail.

a theory saying that, other things equal, R&D expenditures are a percentage of sales rise with industry concentration, reach a peak at a four-firm concentration ratio of about 50 percent, and then falls as concentration further increases.

where the creation of new products and new production methods simultaneously destroys the monopoly market positions of firm committed to existing products and old ways of doing business.