How does innovation differ from invention and diffusion? How does innovation affect competition among firms?
What will be an ideal response?
Innovation is the first successful commercial use of a new product or method, or the creation of a new form of business. There are two major types: product innovation, which involves new and improved products or services; and process innovation, which involves new and improved production or distribution methods. Diffusion is the spread of an innovation through imitation or copying. New and existing firms copy or imitate successful innovations of other firms to profit from new opportunities or protect their profits. Innovation is an important factor in competition because it can enable a firm to “leapfrog” competitors by making their products or methods obsolete.
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A production possibilities curve will shift outward or to the right for all of the following reasons EXCEPT
A) an increase in the unemployment rate. B) an increase in the quality of the labor force. C) an improvement in production technology. D) a discovery of a new source of renewable energy.
When a firm experiences continually declining average total costs, the firm is a
a. government-created monopoly. b. price taker. c. natural monopoly. d. revenue maximizer.
Show graphically why economists refer to single-price monopoly market structure as inefficient.
What will be an ideal response?
Which of the following is NOT a restriction the government imposes to keep potential entrants out of a market?
A. licensing of exclusive ownership of such a vital resources B. subsidizing imported goods C. compliance with government safety regulations D. certificate of convenience