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A complementary approach to supporting R&D that does not involve the government's close scrutiny of particular R&D projects is to give firms a permanent monopoly over all their inventions that never expires. the option to fund all R&D projects through colleges or universities. a reduction in corporate taxes based on amount of R&D performed. assurance that antitrust authorities challenge cooperative R&D efforts.

a reduction in corporate taxes based on amount of R&D performed

When technology is advancing so quickly, even a patent from, say, two years ago may be _________, because _________. somewhat outdated; few firms are relying on the technology completely outdated; no firm is relying on that technology any longer irrelevant; inventors are only receiving a slice of the social value. irrelevant; not every idea can remain under patent protection forever.

completely outdated; no firm is relying on that technology anymore

Which of the following would be classified as a positive externality? a surcharge for ambulance service is shifted to property taxes reselling outdated textbooks to under-funded public schools removing government education subsidies for public schools converting a derelict empty lot to a public vegetable garden

converting a derelict empty lot to a public vegetable garden

Which of the following circumstances would encourage I'MaPharmaCo. to increase research and development activities? cost of financial capital is high patent term expires in 20 years cost of financial capital is low a low rate of return is likely

cost of financial capital is low

If a firm's efforts to be technologically innovative will create a positive externality, then that firm will likely have more incentive to innovate to the extent that the whole of society desires. invest significantly more in its research and development activities. have less incentive to innovate to the extent that the whole of society desires. demand more financial capital investment to expand its R&D activities.

have less incentive to innovate to the extent that the whole of society desires

Why did Gordon Gould have to endure a lengthy legal battle in order to receive a patent for his innovative laser idea concocted in 1957? by 1957, several other scientists had filed patents ahead of him, but none of their laser inventions worked he delayed applying to patent his idea, mistakenly believing he needed to have a working laser to apply by 1957, his laser was no longer the inspiration of a single person. by 1957, his laser technology overlapped previous laser patents.

he delayed applying to patent his idea, mistakenly believing he needed to have a working laser to apply

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded, it will enjoy a small temporary advantage over the competition. it would be able to set price to compensate for development costs. it could sell the new computers as a monopoly for at least a few years. it would receive a government bailout if losses could drive it out of business.

it could see the new computers as a monopoly for at least a few years

Why did Thomas Edison vow that he would work only on ideas for things that people would buy? only things that people will buy produce a social benefit. only ideas that people will pay a high price for are protected by patents. he wanted to hold the record for registering the most patents. no government would buy his first patented invention.

no government would buy his first patented invention

It is commonly understood that every invention has its own story of discovery and development. often involved a parade of characters and firms. has a unique story that develops over years or decades. often results in new technology and all of the above.

often results in new technology and all of the above

In economic terms, when I'mASoftwareCo. invests in new technology innovations, competitive externalities arise. potential externalities arise. negative externalities arise. positive externalities arise.

positive externalities arise

For a positive externality, ________ than the social benefits. private benefits of an action are more social benefits of an action are more private benefits of an action are less social costs of an action are less

private benefits of an action are less

When a firm invests in new technology, the ______ that the firm receives are ________. private benefits; only a portion of the overall social benefits social benefits; only a portion of the overall private benefits private benefits; about three-quarters of the economic benefits social benefits; about one-third of the overall private benefits

private benefits; only a portion over the overall social benefits

For a negative externality, the ________ than the costs imposed on society as a whole. private costs of an action are less social costs of an action are less private benefits of an action are more social benefits of an action are more

private costs of an action are less

In the case of technology, it can sometimes be quite difficult for ________ to earn a _______ rate of return from their invention individuals; high public investors; low private investors; reasonable the whole of society; high

private investor; reasonable

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is nonrivalrous and excludable rivalrous and nonexcludable nonrivalrous and nonexcludable rivalrous and excludable

rivalrous and nonexcludable

Which of the following would most likely be recognized as a defining characteristic of a public good? the good is nonrivalrous item the good is nonexcludable item the good is both a and b above the good is a separate and identifiable item

the good is both a and b (non excludable and nonrivalrous )

he difference between playing a board game and a playing a video game is the elimination of free riders involvement of fewer rivals involvement of free riders technology of the video game

the technology of a video game

Market competition may sometimes encourage a firm to innovate out of fear because of the perception that they will inevitably fall behind other competitors seeking out innovations. the firm will only have a very temporary edge over its competitors. the ability to earn above-normal profits is also available to its competition. higher profits can only be earned by finding less expensive ways to produce.

they will inevitably fall behind other competitors seeking out innovations

Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology? to help inventors earn higher rates of return to help inventors earn reasonable returns to encourage a stream of inventions that monetarily benefit the inventor. to encourage a stream of invention that benefits the whole of society.

to encourage a stream of invention that benefits the whole of society

Which of the following would some economists be likely to perceive as the most appropriate public policy response to a positive externality created by the development of a highly innovative new technology? not taking into account the negative externality associated with social benefit not taking into account the positive externality associated with social benefit have reasonable rates of return not based on a notion of unearned social benefits develop ways to provide a greater share of the social benefits to the innovator

develop ways to provide a greater share of social benefits to the innovator

A public good is a good that is _______, and thus is difficult for market producers to sell to individual consumers.

nonexcludable and nonrivalrous

Some studies done by economists have found that the original inventor receives ______ from innovations, while other businesses and new product users receive the rest of the benefit. one-quarter to one-half of the social and economic benefits one-quarter to one-third of social and economic benefits one-third to one-half of the total economic benefits one-quarter to one-third of the total economic benefits

one third to one half of total economic benefits

Generally, market competition and technology can support each other. oppose each other. compliment each other. sometimes a or b.

sometimes a or b

Market competition can provide __________ for __________, unsustained profits; firms with marketable patents the needed incentive; discovering new technologies time; competitors to catch up with other's inventions an opportunity; competitors seeking out innovations

the needed incentive; discovering new technologies

One difficulty with direct government support of R&D is that it inevitably involves government decisions about __________. whether it can agree on the amount of social benefit conferred to private firms which of the vast number of proposed projects are worthwhile the location of the congressional district receiving the research funding. quantifying the social benefit conferred on a private firm by an R&D tax reduction.

which of the vast number of proposed projects are worthwhile