Chapter 13

Question 1

What is the key principle of Samsung’s business?

Answer 1

Relentless pursuit of innovation

Question 2

What is the estimated rate of return to a college education in the US?

Answer 2

10-15%

Question 3

What is the term for the benefit that includes spillover effects?

Answer 3

Marginal social benefit (MSB)

Question 4

What is the relationship between public goods and positive externalities?

Answer 4

Public goods have positive externalities

Question 5

Is online shopping better for the environment?

Answer 5

Yes, generally more efficient.

Question 6

What caused an increase in the number of patents beginning in the 1990s?

Answer 6

Invention of the internet

Question 7

What does a patent do in terms of goods?

Answer 7

Makes inventions private

Question 8

What is considered a public good?

Answer 8

New knowledge

Question 9

What has increased globalization done to businesses?

Answer 9

Shuttered businesses and reduced wages

Question 10

What does AFRI stand for?

Answer 10

Agriculture and Food Research Initiative

Question 11

Why do nations subsidize education?

Answer 11

Benefits individuals and society

Question 12

What is the R&E tax credit?

Answer 12

Research and experimentation tax credit

Question 13

What is a public good?

Answer 13

National defense example

Question 14

What type of goods are nonexcludable and rivalrous?

Answer 14

Common resources

Question 15

What is one U.S. Government policy that encourages innovation?

Answer 15

Intellectual property rights

Question 16

What are the defining characteristics of a public good?

Answer 16

Nonexcludable and non-rival

Question 17

What is a challenge of government innovation?

Answer 17

Employment change

Question 18

What do social benefits of innovation include?

Answer 18

Positive externalities and private benefits

Question 19

What does non-rival mean in public goods?

Answer 19

One person can use it without affecting another

Question 20

Do economists generally believe higher education pays off?

Answer 20

Yes

Question 21

Who benefits from the returns to education?

Answer 21

Individual worker

Question 22

What is a drawback of the 20-year patent period?

Answer 22

Allows monopoly pricing

Question 23

How has the reliance on R&D funding changed over time?

Answer 23

Shifted to industry-funded

Question 24

What are examples of public goods?

Answer 24

Police and fire services

Question 25

What advantage does an innovative firm have?

Answer 25

Temporary edge over competitors

Question 26

What are positive externalities of education?

Answer 26

Better health, lower crime, cleaner environment, stable government

Question 27

Can goods and services with positive externalities be private?

Answer 27

Yes

Question 28

Give an example of a private good with positive externalities.

Answer 28

Education, Apple iPad