On balance, does market power promote or retard technological innovation?
The evidence is not clear-cut. While small competitive firms have great incentive to innovate to gain a competitive edge over rivals, larger firms have greater resources to devote to research.
On the question of firm size and R & D spending, there is evidence that competitive industries with very small firms devote fewer resources to R & D. Up to a point, R & D rises and rates of innovation rise with firm size. However, some of the most significant innovations in the twentieth century have been introduced by small firms. Examples include electric lighting, photocopiers, and electronic calculators. It should be noted, though, that large firms are often superior marketers of technological innovations where small firms are not.
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At the profit-maximizing level of production of a monopolist, ________
A) marginal revenue equals marginal cost B) marginal revenue exceeds marginal cost C) marginal revenue is less than marginal cost D) both marginal revenue and marginal cost are negative
A bond's price and its yield to maturity are inversely related because
A) discounting future payments at a higher rate reduces the present value of the payments. B) discounting future payments at a higher rate increases the present value of the payments. C) an increase in the yield to maturity will lower a bond's coupon rate and hence its price. D) a fall in a bond's price will lower its par value and hence its yield to maturity.
Advertising, brand names, packaging, and celebrity endorsements all occur in monopolistically competitive markets because:
a. significant barriers to entry exist in the real world. b. in the real world, there are very few markets with many firms. c. that gives the producer some command over the price of their products. d. product differentiation seldom occurs in the real world. e. monopolistically competitive firms have an incentive to spend as much money as possible compared to their rivals.
The price system always works instantaneously.
Answer the following statement true (T) or false (F)