What is the imitation problem resulting from technological advance? How might a dominant firm respond to the threat from product innovation by a smaller firm?
What will be an ideal response?
The imitation problem is that the rivals of a firm may copy or emulate the firm’s product or process, and thus decrease the profit from the innovator’s R&D effort. A dominant firm might use a “fast-second” strategy that involves quickly imitating the successful new product of smaller competitors with the goal of becoming the second firm to adopt the innovation. The dominant firm then depends on its marketing skills or economies of scale to eventually capture market leadership.
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Suppose that there is an increase in technology. The classical model predicts that
a. both output and the price level rises. b. output rises and the price level remains the same. c. output rises and the price level falls. d. none of the above.
Which of the following effects will not increase (i.e., shift to the right) the aggregate supply curve?
a. An increase in the average national price level. b. An appreciation of the domestic currency. c. An increase in the number of immigrants. d. All of these answers are correct. e. None of these answers are correct.
In economics, welfare analysis is useful to
A) gauge the validity of "mend it, don't end it." B) determine who should receive income transfers. C) determine who gains and who loses in a particular policy option. D) prove which policy option is "best."
When the United States engaged in quantitative easing from 2008 to 2014, ________ rose sharply.
A. the unemployment rate B. bank reserves C. inflation D. the money supply