Economics: Principles and Policies, 9e: Chapter: Microeconomics of the "New Economy"

Chapter: Microeconomics of the "New Economy"

Your Full Name:

Your Email Address: (required)

The Email address of an instructor to mail your quiz results:

1. Rising agricultural productivity in the United States has meant that: a. the amount of labor needed to work on farms has increased dramatically.
b. the amount of labor needed to work on farms has not changed.
c. the amount of labor needed to work on farms has only increased slightly.
d. the amount of labor needed to work on farms has decreased dramatically.
e. the amount of labor needed to work on farms has decreased slightly.

2. Capitalism is a market economic system with: a. most production processes controlled by the government.
b. most production processes controlled by private firms with minimal government control.
c. all production processes controlled by private firms.
d. all production processes controlled by the government.
e. most production processes controlled by the government, with some control by private firms.

3. Which of the following is considered a key economic influence on the capacity of market economies to promote unprecedented growth?: a. Political changes
b. Religious beliefs
c. Historical accidents
d. Free competition
e. Cultural factors

4. If the marginal revenue from R&D is less than the marginal cost, a profit maximizing firm will: a. decrease the amount it spends on R&D.
b. increase the amount it spends on R&D
c. leave unchanged the amount it spends on R&D.
d. stop spending on R&D altogether.
e. probably decrease its spending or R&D, but it may increase it.

5. Firms share technology with rivals,: a. in order to better compete with their rivals.
b. in order to help out when their rivals are in trouble.
c. to share the substantial risks of innovation.
d. because they are required to by law.
e. in order to pass false information to their rivals in order to drive them out of business.

6. Which of the following is true?: a. A steady flow of innovation means that GDP remains constant.
b. A steady flow of innovation is not enough to keep GDP constant.
c. An increasing flow of innovation is necessary for GDP to grow.
d. An increasing flow of innovation means that GDP remains constant.
e. A steady flow of innovation is all that is necessary for GDP to grow.

7. All of the following are features of innovation that magnify its contribution to GDP growth, except: a. Many innovations create cumulative changes
b. The benefits of innovation are captured entirely by the individual/firm funding the innovation.
c. Innovation has a public goods property.
d. Innovations act like an accelerator.

8. Which of the following is true?: a. More resources devoted to innovation this year means less consumption this year.
b. More resources devoted to innovation this year means more consumption in the future.
c. More resources devoted to innovation this year means better and cheaper products in the future.
d. More resources devoted to innovation this year means higher prices for products this year.
e. All of the above.

9. Patents are generally justified on the grounds that: a. the negative externalities associated with innovation weaken the incentives of firms to invest in innovation.
b. the positive externalities associated with innovation weaken the incentives of firms to invest in innovation.
c. firms will not invest in any innovation otherwise.
d. too many resources will be allocated to innovation otherwise.
e. the government hopes to collect higher taxes from firms that are granted patents.

10. A profit maximizing monopoly will spend on a process innovation: a. up to the point where P = MC
b. up to the point where P = AC.
c. anywhere where MR > MC.
d. up to the point where MR = MC.
e. anywhere where MR < MC.