question
The "Inverted-U theory" of R&D shows the relationship between:
answer
Market concentration ratio and R&D expenditures
question
A firm decides to make a $20 million expenditure on research and development that will create a new product. This product is expected to increase the firm's revenues by a total of $24 million in the next year. The firm also estimates that the production cost of the new product will be $22 million. What is the expected rate of return on this research and development expenditure?
answer
10 Percent
question
The traditional view of technological advance was that it:
answer
Was a random external force to which the economy adjusts
question
The spread of an innovation to other products through imitation is called:
answer
Diffusion
question
In 2011, which of the following nations ranked highest in total R&D expenditures as a percent of GDP?
answer
Sweden
question
When marginal cost is increasing, Total cost is:
answer
Decreasing
question
Which of the following is a typical example of a fixed cost of production in a business firm?
answer
Depreciation of Capital
question
If you know that with 8 units of output, average fixed cost is $12.50 and average variable cost is $81.25, then total cost at this output level is:
answer
$750
question
You are the only seller of eggs in town, and the price-elasticity coefficient for eggs is known to be 0.8. If you want to increase your sales quantity by 10% through a price-change, what should you do to price?
answer
Increase price by 12.5%
question
Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an:
answer
Elastic demand to see movies in the afternoon
question
Which market model assumes the least number of firms in an industry?
answer
Pure Monopoly
question
In which two market models would advertising be used most often?
answer
Monopolistic and Oligopoly
question
If the market demand for the product increases, in the short run a purely competitive firm:
answer
Will earn higher profits or experience smaller losses as a result of the change in the market
question
The long-run supply curve would be upward-sloping if:
answer
Resource prices fall as industry production contracts
question
In the context of analyzing economic efficiency, we can interpret the market supply curve to be showing:
answer
The marginal opportunity cost to produce each unit of the product
question
Allocative efficiency occurs when the:
answer
Marginal cost equals the marginal benefit to society
question
If oligopolistic firms facing similar cost and demand conditions successfully collude, price and output results in this industry will be most accurately predicted by which of the following models?
answer
The pure monopoly model
question
Which cannot be a characteristic of an oligopolistic industry?
answer
A perfectly elastic firm demand curve
question
A game in which one firm's gain must equal the other firm's loss is called a:
answer
Zero-sum game
question
The Herfindahl index is a measure of:
answer
Market power in an industry
question
Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will:
answer
Attract other firms to enter the industry, causing the existing firms' profits to shrink
question
Excess capacity implies:
answer
Productive inefficiency
question
In monopolistic competition, which of the following would make an individual firm's demand curve less elastic?
answer
Increased brand loyalty toward the firm's product
question
The monopolistically competitive seller's demand curve will become more elastic the:
answer
Larger the number of competitors
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