Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that:
A. oligopolists have little incentive to introduce costly new technology and produce new
products when they currently are earning large economic profit using existing technology
and selling existing products.
B. the undistributed profits of oligopolists give them a source of readily available, relatively
low-cost funds for financing R&D.
C. entry barriers enable oligopolists to sustain the profits they gain from innovation.
D. the large size of oligopolists' R&D departments allows them to use very specialized,
expensive R&D equipment and employ teams of specialized researchers.
Answer: A
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The variety that monopolistic competition provides is paid primarily by
A. all consumers whether they desire variety or not. B. the producer whose ability to pass on costs is limited by his demand curve. C. those customers who desire the variety. D. no one because variety costs no more to produce than uniform products cost to produce.
The "crowding out" effect refers to the:
A. increase in domestic investment by foreigners, leaving little investment choice for domestic investors. B. irrational exuberance of the market reducing the number of rational investments available. C. reduction in the interest rate caused by governments running a deficit. D. reduction in domestic investment caused by governments running a deficit.
Isoquants slope downward because:
A. the marginal rate of substitution increases. B. as less of one input is used, more of another must be used if costs are to remain constant. C. average total costs decline. D. as less of one input is used, more of another must be used if output is to remain constant.
Under fair-returns price regulation:
A) deadweight loss is likely to be maximized. B) deadweight loss is likely to be minimized. C) firms are less likely to innovate because they earn zero profits. D) firms are more likely to innovate because they earn positive profits.