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If the economy has constant returns to scale with respect to rival inputs like capital and labor, then in order for there to be economic profits available to innovators it must be true that:

Rival inputs are paid less than their marginal product (wrong) Rival inputs are paid more than their marginal product (wrong)

Select all of the following that are types of legal intellectual property protections?

Patents Copyrights Trade secrets property deeds Trademarks

Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in productivity. You can think of this as a major innovation (AI?) that comes from outside the normal innovation process. What happens in the long run to the growth rate of productivity after this surprise?

equal to`

Most upper level courses at UH have pre-reqs. These force you to take other courses (and pay tuition) in order to access the upper level course, even though any number of people can learn the material in an upper level class without stopping anyone else from learning the same material. What property do upper level courses have due to the pre-reqs?

excludability

Sheet music is like a "recipe" for producing sounds. If one band is playing a song off of a piece of sheet music, another band can play the same song at the same time. Based on this description, what property does sheet music possess?

rivalry (wrong) non rivalry

Which country has had the fastest growth rate of R&D expenditure from 1989 to the present?

china

My neighbor sometimes will smoke a brisket in his back yard. It smells *amazing*. He can't effectively stop me from smelling his brisket. But there is no way that everyone could all smell the brisket at the same time (some of you live far away, etc..). What property does the *smell* of brisket have?

non excludability

In order to provide an incentive to innovate, what property must ideas possess?

non rivalry (wrong) non exclu (wrong) Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in the number of researchers. You can think of this as a influx of researchers (Hong Kong?) that comes from outside the normal process of growth in researchers. What happens in the long run to the growth rate of productivity after this surprise?

When thinking about the effect of competition within an industry on how much innovation occurs, which of the following situations is likely to generate the *most* innovation?

A high level of competition where there are almost no economic profits (wrong) A "medium" level of competition with some economic profits

From a *global* perspective, which of the following is consistent with the data?

As population increased, the level of productivity increased(wrong)

Which of the following best describes why capital accumulation does *not* lead in the long run to growth in GDP per capita, but higher productivity *does* lead in the long run to growth in GDP per capita.

Capital is a rival good, so even if we add more of it, it can only increase the output of a few workers at a time. Productivity in non-rival, so as we get more productive, it can increase the output of *all* workers at the same time.

Some economic profits appear to be necessary to provide incentives to innovate, and economic profits require that there be some market power for firms. Does this imply that increasing market power for firms will always increase innovation, no matter what?

No. At some point with too much market power a firm (like a monopoly) has no reason to innovate because it is facing no competition.

Which of the following describes what "non-rival" means?

The good or idea can be used by one person, and that does not prevent anyone else from using that same good or idea at the *same* time.

From the model of productivity growth, *on a balanced growth path* which of the following is true?

The higher the number of researchers, the faster the growth rate of productivity

Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in the number of researchers. You can think of this as a influx of researchers (Hong Kong?) that comes from outside the normal process of growth in researchers. What happens in the long run to the level of productivity after this surprise?

The level of productivity is permanently higher than it would have been without the surprise.

Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in productivity. You can think of this as a major innovation (AI?) that comes from outside the normal innovation process. What happens in the long run to the level of productivity after this surprise?

The level of productivity is permanently higher than it would have been without the surprise. There isn't enough information to tell

A live performance by a band can only be seen and heard by those people in the same venue. What property do live performances have because you "have to be there", even if the performance was free?

excludaility (wrong) rivalry

Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in productivity. You can think of this as a major innovation (AI?) that comes from outside the normal innovation process. What happens in the short run to the growth rate of productivity after this surprise?

gA > (wrong)| ga < (wrong) ga = wrong no info

Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in the number of researchers. You can think of this as a influx of researchers (Hong Kong?) that comes from outside the normal process of growth in researchers. What happens in the short run to the growth rate of productivity after this surprise?

ga >

Imagine an economy has productivity growth described by the model in the Study Guide. It starts on a balanced growth path. Then, there is a surprise, one-time, *increase* in the number of researchers. You can think of this as a influx of researchers (Hong Kong?) that comes from outside the normal process of growth in researchers. What happens in the long run to the growth rate of productivity after this surprise?

ga > (wrong) ga < (wrong) ga =