Answer the following statement true (T) or false (F)
1) A firm's optimal amount of R&D occurs where the interest-rate cost of funds and the expected
rate of return are equal.
2) Successful new products enable consumers to increase the total utility they obtain from a
specific amount of their total spending.
3) Process innovation is represented as a downward shift in a firm's total product curve and its
average total cost curve.
4) The theory that R&D expenditures as a percentage of firms' sales first rise, reach a peak, and
then fall with increases in industry concentration is called the inverted-U theory of R&D.
5) The process by which new firms and new products destroy existing dominant firms and their
products is called creative destruction.
1) T
2) T
3) F
4) T
5) T
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A market in which the Herfindahl-Hirschman Index is 1,000 is regarded by the Federal Trade Commission as
A) moderately concentrated. B) concentrated. C) competitive. D) monopolistic.
Under current law, Part A of Medicare is financed by a payroll tax of
A. 6.60% imposed upon employers. B. 1.45% imposed upon employers and 1.45% imposed upon employees. C. 2.90% imposed upon employees. D. 2.90% imposed upon employers.
It is possible to purchase diplomas from diploma mills. The situation in which the degrees are more important than the knowledge they are supposed to represent is called:
A. accreditation. B. credentialism. C. cretinism. D. diplomacy.
When unanticipated deflation occurs:
A. Both creditors and debtors benefit B. Both creditors and debtors are hurt C. Debtors are hurt, but creditors benefit D. Creditors are hurt, but debtors benefit