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What effect might market power have on technological​ change?

Market power results in

a. economic efficiency, which eliminates the need for new technology. 

b. no barriers to entry, allowing new firms to begin producing technologically improved substitutes. 

c. marginal cost pricing, leaving no resources with which to invest in new technology.

d. economic profit that can be spent on research to develop new products.

e. economic profit, leaving no incentive to invest in new products.  

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manhokwe tawanda
manhokwe tawandaLv10
30 Dec 2020

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1. According to economists today, economic growth depends on:

1) resources.

2) technology.

3) institutions.

4) resources and technology.

5) resources, technology, and institutions.

2. Which of the following is FALSE?

1) Real-world observations shape economic theory.

2) Economic theory shapes policy decisions.

3) Policies affect real-world events.

4) Economic theory has no impact on real-world events.

5) None of these statements is false.

3. After the Great Depression, the main focus of macroeconomics was:

1) growth theory.

2) the study of business cycles.

3) the study of stock markets.

4) the study of why businesses fail.

4. The Solow Growth Model serves as a foundation of:

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2) microeconomic theory.

3) growth theory.

4) all economic theory.

5. According to the Solow Growth Model, which of the following is/are the primary source(s) of economic growth?

A - Natural resources

B - Human capital

C - Physical capital

D - A and B

E - A and C

F- B and C

G- A, B, and C

6. According to the Solow Growth Model, the marginal product of capital is:

1) zero and increases as the quantity of capital increases

2) zero and decreases as the quantity of capital increases.

3) negative and increases as the quantity of capital increases.

4) negative and decreases as the quantity of capital increases.

5) positive and increases as the quantity of capital increases.

6) positive and decreases as the quantity of capital increases.

7. If building new capital is costless and the capital depreciation rate is zero, then an economy will reach a steady state in which the marginal product of capital is:

1) equal to zero.

2) greater than zero.

3) less than zero.

8. Which of the following is true for an economy before it reaches the steady-state?

1) Investment and net investment are both positive.

2) Investment is positive but net investment is zero.

3) Investment is zero but net investment is positive.

4) Investment and net investment are both zero.

9. The idea of convergence suggests that when underdeveloped nations begin to develop, they typically have _____________ growth rates as they catch up to the developed nations.

1) higher

2) lower

3) similar

4) very low

10. Which of the following is true after allowing for sustained technological advance in the Solow Growth Model?

I. The steady-state situation is avoidable.

II. The marginal product of each unit of capital will increase.

III. A diminishing marginal product is avoidable.

Only I only II

Only III

I and II

I and III

II and III

I, II, and III

11. What is the primary difference between the basic Solow model and the second Solow model?

1) The models are theoretically similar. The second Solow model is only more mathematically complex than the basic model.

2) The second Solow model allows for technological change, while the basic model doesn't.

3) The basic Solow model features diminishing returns, in contrast to the second model.

4) The marginal product eventually becomes zero in the basic model, while such a situation is avoidable in the second Solow model.

12. All of the following can result in economic growth except:

1) improved schools and colleges.

2) a boost in population growth.

3) a favorable climate.

4) an improved health care system.

13. Which of the following will result in a movement along with the aggregate production function?

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I and III

II and III

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1) Technological change is random.

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3) high tax rates

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A - Population growth is an obstacle to economic growth.

B - Competition encourages the discovery of new goods and services, which leads to economic growth.

C - A country can grow faster if it disengages itself from international trade with foreign nations.

D - Taxes should be abolished, as they hurt incentives necessary for economic growth.

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A, B, and D

19. According to the new growth theory, the low living standards in many developing countries can be explained by a lack of:

A - natural resources.

B - free markets.

C - sound institutions.

D - strong military resources.

all of these.

B and C.

A and D.

1. Patent laws:
reduce incentive to innovate by restricting market entry
reduce incentive to innovate by making it difficult to use thepatented innovation
increase incentive to innovate by restricting entry into amarket
increase incentive to innovate by giving a firm permanent andexclusive production rights


2. Which of the following is true of marginal revenue for amonopolist that charges a single price?
P = MR because there are no close substitutes for the monopolist'sproduct.
P > MR because the monopolist must decrease price on all unitssold in order to sell an additional unit.
P < MR because the monopolist must decrease price on all unitssold in order to sell an additional unit.
AR = MR because there are no close substitutes for the monopolist'sproduct.


3. Negative marginal revenue means that
total revenue is decreasing as output increases
the firm is maximizing its total revenue
the firm is maximizing its economic profit
total revenue is increasing at a decreasing rate as outputincreases


4. A profit-maximizing monopolist produces an output level atwhich
marginal revenue is the greatest distance from marginal cost
price is less than marginal cost
the value to society of the last unit produced equals marginalcost
marginal revenue equals marginal cost


5. Compared to a perfectly competitive market, a monopoly tends toproduce
more output and charge a higher price
the same amount of output, but charge a higher price
less output and charge a higher price
less output and charge the same price


6. Monopolistic competition is best described as
many firms with some control over price, and some productdifferentiation
many firms with no control over price, producing identicalproducts
a few firms with some control over price, producing highlydifferentiated products
a few firms with no control over price, producing similarproducts


7. Which of the following characteristics does perfect competitionshare with monopolistic competition?
price-taking firms
zero long-run economic profit
homogeneous product
some barriers to entry


8. Monopolistically competitive firms do not achieve productiveefficiency because
entry of firms raises production costs in the long run
barriers to entry allow profit to be earned in the long run
price is greater than marginal cost at the profit maximizing outputlevel
profit is maximized at a quantity where average total cost is notminimized


9. There are multiple models of pricing behavior in oligopolisticmarkets because
it is difficult to predict how rival firms will react to anypricing decision
the demand curve slopes upward for these firms
firms could earn profit in the long run unlike other markets
price has a direct impact on profit for a firm in oligopoly


10. Which of the following is likely to occur when a two-persongame can be played repeatedly?
Collusion and cooperation among the players
The prisoner's dilemma
The industry demand curve will become perfectly elastic
The industry demand curve will become perfectly inelastic


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