Question 1

Which of the following would NOT be an example of a technological change?
A) The government passes a law expanding the funding available to NASA and other agencies concerned with the advancement of basic science.
B) A pharmaceutical company develops a new drug that effectively fights malaria.
C) A team of nuclear scientists develop a new way of generating nuclear power that is safer than the older methods but is more expensive to implement.
D) Google develops a new way to perform Internet searches that makes searches produce more relevant results.

Accepted Answer

Passing a law, by itself, does not introduce new goods or services, or new processes of production, to the market. Such funding might actually reduce technological change if the funds going to NASA require other sources of technological change to have less funding.

Question 2

A productivity-enhancing innovation has the effect of
A) shifting a supply curve to the right.
B) shifting a supply curve to the left.
C) shifting a demand curve to the right.
D) shifting a demand curve to the left.

Accepted Answer

In general, a productivity-enhancing innovation in an industry provides more of the same product, holding the resources employed constant. This has the effect of shifting the supply curve to the right.

Question 3

The government allows inventors to apply for a temporary government monopoly on their invention.The government will prevent others from making or selling the invention for a period of years to encourage innovation.What is this temporary monopoly called?
A) A trademark.
B) A patent.
C) An investment tax credit.
D) Moore's law.

Accepted Answer

A patent is a grant for the government that allows an inventor to control the use of his or her innovation for a set period, currently 20 years. In particular, the inventor has the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States.

Question 4

Which of the following would be an example of applied research?
A) Studies of the earth's climate 5,000 to 6,000 years ago.
B) Research into the use of new combustion techniques that could increase gas mileage in vehicle engines.
C) Research into the effects of zero-gravity environments on plant life.
D) Research into string theory in advanced subatomic physics.

Accepted Answer

Applied research is devoted to solving real-world problems that have obvious commercial applications.

Question 5

The immigration of skilled scientists and engineers from other nations will have which of the following effects?
A) The demand curve for innovative activities will be pushed to the left, decreasing the amount of innovation.
B) The supply curve for innovative activities will be pushed to the left, increasing the amount of innovation.
C) The demand curve for innovative activities will be pushed to the right, increasing the amount of innovation.
D) The supply curve for innovative activities will be pushed to the right, increasing the amount of innovation.

Accepted Answer

The immigration of scientists and engineers from other nations allows an increase in the number of people involved in innovative activities. This pushes the supply curve to the right, lowering the price of innovative activities and increasing the quantity.

Question 6

Scientific investigations that have no immediately obvious commercial applications are called
A) basic research.
B) sterile research.
C) applied research.
D) diffused research.

Accepted Answer

Scientific investigations that have no immediately obvious commercial applications are called basic research.

Question 7

Which of the following is the function of a patent?
A) A patent encourages more rapid technological diffusion by requiring the inventor to license the invention to anyone at no charge for three years.
B) A patent allows the inventor to prevent others from making or selling an invention for a period of years to encourage innovation.
C) A patent produces revenue for the federal government by giving the government a percentage of the licensing fees from new inventions.
D) A patent prevents the inventor from licensing the invention to anyone for a period of 20 years to encourage the inventor to more thoroughly develop the idea.

Accepted Answer

A patent allows the inventor to prevent others from producing the invention for some years, allowing the inventor to gain a reward for innovation in the form of temporary monopoly profits. This increases the private return to innovation.

Question 8

Which of the following is not an example of research and development?
A) Government funding to a biochemistry professor for the study of new pharmaceutical therapies.
B) Government funding to elementary and middle schools.
C) Government funding of new public transportation technologies.
D) General Motors funding a study of new internal combustion technology.

Accepted Answer

Money directed toward primary education is not developing new ideas or technology for society.

Question 9

Which of the following occurs if there is a quality-of-life innovation?
A) Positive externalities are reduced, or negative externalities are increased.
B) Positive externalities are increased, or negative externalities are reduced.
C) New goods or services are created, allowing people to do things that they could not do before.
D) More of the same products can be produced at lower cost.

Accepted Answer

A quality-of-life innovation results in an increase in positive externalities or a reduction in negative externalities.

Question 10

Which of the following would tend to encourage more innovation in the United States?
A) Stricter enforcement of the patent laws.
B) A limit on the number of scientists and engineers from other nations who are allowed to work in the United States.
C) Government restrictions on the amount of risk venture capital firms are allowed to take.
D) Protection of manufacturing industries through tariffs and other trade barriers.

Accepted Answer

Patents encourage innovation by giving the innovator a temporary monopoly, thereby rewarding the development of useful new ideas.

Question 11

Scientists sent the Cassini spacecraft past Saturn,where it discovered rings around Saturn's moon Rhea.This is an example of
A) Technological diffusion.
B) Product development.
C) Applied research.
D) Basic research.

Accepted Answer

See the definition of basic research in the textbook.

Question 12

Which of the following would tend to narrow the gap between the private return to innovation and the social return to innovation?
A) More spending on research and development.
B) More competition in the production of newly created goods and services.
C) A patent.
D) An increase in overall scientific productivity.

Accepted Answer

A patent allows the inventor to prevent others from producing the invention for some years, allowing the inventor to gain a reward for innovation in the form of temporary monopoly profits. This increases the private return to innovation.

Question 13

Suppose home builders figure out how to produce houses faster by prefabricating more of the house in a factory,then transporting the components to the construction site.This saves labor time and prevents materials from being wasted.Which type of innovation is this?
A) The creation of new goods and services.
B) A quality-of-life innovation.
C) A productivity-enhancing innovation.
D) Basic research.

Accepted Answer

A productivity-enhancing innovation gives us more of the same product, holding the resources used fixed.

Question 14

Suppose scientists figure out how to prevent strokes and heart attacks by using microscopic robots that enter the bloodstream and fix problems before they become serious.This could fit into two categories of innovation.They are
A) a quality-of-life innovation and a productivity-enhancing innovation.
B) the creation of new goods and services and a productivity-enhancing innovation.
C) the creation of new goods and services and a quality-of-life innovation.
D) a productivity-enhancing innovation and basic research.

Accepted Answer

The microscopic robots represent a technology that is wholly new to medicine, and they also enhance the quality of life for those who benefit from the technological advancement.

Question 15

Which of the following would be an example of basic research?
A) Studies of the atmosphere on Neptune.
B) Research into gene therapy to treat Alzheimer's disease.
C) Studies of circuit miniaturization for applications in computers.
D) A pharmaceutical company's research into a chemical compound that could reduce the growth rate of cancer cells.

Accepted Answer

Basic research does not have any immediately obvious commercial applications.

Question 16

The process by which new ideas spread from the original company to other businesses in the economy is called
A) technological diffusion.
B) innovative revolution.
C) Moore's process.
D) patent dispersion.

Accepted Answer

The process by which new ideas spread from the original company to other businesses in the economy is called technological diffusion.

Question 17

Which of the following would raise the wages of scientists and engineers?
A) A decline in the rate of return on research and development.
B) A decline in the level of legal protection of property rights over new inventions.
C) An increase in the demand for innovative activities.
D) The immigration of skilled scientists and engineers from other nations.

Accepted Answer

An increase in the demand for innovative activities means that the demand curve has shifted to the right, pushing up the price of innovative activities and increasing the equilibrium quantity.

Question 18

Suppose a new way of producing fireworks is developed,using different chemicals that do not release as many hazardous heavy metals into the environment.Which type of innovation is this?
A) A quality-of-life innovation.
B) The creation of a new good or service.
C) A productivity-enhancing innovation.
D) Basic research.

Accepted Answer

Technological advances that reduce pollution fall into the category of a quality-of-life innovation, but no new good has been created, and fireworks are not being produced at a lower cost.

Question 19

The largest spender on research and development in the world (in total dollars or dollar equivalents)is
A) China.
B) the United States.
C) Japan.
D) the United Kingdom.

Accepted Answer

Refer to the discussion of research and development spending in the textbook.

Question 20

Allowing people to profit from their innovations has which of the following effects?
A) Technological improvement will be slowed because people focus only on commercially viable projects instead of projects that are truly useful to society.
B) The rate of technological advancement will expand because people are encouraged to innovate by the hope of financial gain.
C) Resources will be diverted from other parts of the economy so that the economy as a whole suffers.
D) Society will benefit, but only to the extent that the profits from those innovations are taxed for the common good.

Accepted Answer

The hope of profit tends to attract resources into innovative activities, expanding the amount of innovation and helping the economy grow.

Quiz 15: Technological Change

Which of the following would NOT be an example of a technological change?

A productivity-enhancing innovation has the effect of

The government allows inventors to apply for a temporary government monopoly on their invention.The government will prevent others from making or selling the invention for a period of years to encourage innovation.What is this temporary monopoly called?

Which of the following would be an example of applied research?

The immigration of skilled scientists and engineers from other nations will have which of the following effects?

Scientific investigations that have no immediately obvious commercial applications are called

Which of the following is the function of a patent?

Which of the following is not an example of research and development?

Which of the following occurs if there is a quality-of-life innovation?

Which of the following would tend to encourage more innovation in the United States?

Scientists sent the Cassini spacecraft past Saturn,where it discovered rings around Saturn's moon Rhea.This is an example of

Which of the following would tend to narrow the gap between the private return to innovation and the social return to innovation?

Suppose home builders figure out how to produce houses faster by prefabricating more of the house in a factory,then transporting the components to the construction site.This saves labor time and prevents materials from being wasted.Which type of innovation is this?

Suppose scientists figure out how to prevent strokes and heart attacks by using microscopic robots that enter the bloodstream and fix problems before they become serious.This could fit into two categories of innovation.They are

Which of the following would be an example of basic research?

The process by which new ideas spread from the original company to other businesses in the economy is called

Which of the following would raise the wages of scientists and engineers?

Suppose a new way of producing fireworks is developed,using different chemicals that do not release as many hazardous heavy metals into the environment.Which type of innovation is this?

The largest spender on research and development in the world (in total dollars or dollar equivalents) is

Allowing people to profit from their innovations has which of the following effects?