Unit 21 Flashcards

1
Q

Invention

A

We use the word innovation to refer to both the development of new methods of production and new products (invention)

Radical innovation & Incremental innovation

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2
Q

diffusion

A

and the spread of the invention throughout the economy (diffusion)

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3
Q

Process innovation

A

Producing a good at lower costs than its competitors

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4
Q

Product innovation

A

A new product that will attract buyers

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5
Q

radical innovation

A

creating a brand new technology or idea which delivers new value

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6
Q

Incremental innovation

A

Innovates a existing technology/service/product

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7
Q

innovation rents

A

Individuals or companies who deliver a socially beneficial innovation, deliver a profit above the opportunity cost of capital

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8
Q

general-purpose technologies

A

Technological advances that can be applied to many sectors, and spawn further innovations. Information and communications technology (ICT), and electricity are two common examples.

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9
Q

Codified knowledge

A

Knowledge that canoe written down, and can be copied by others and be implemented (such as a formula to make drugs)

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10
Q

tacit knowledge

A

Knowledge made up of the judgements, know-how, and other skills of those participating in the innovation process. The type of knowledge that cannot be accurately written down.

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11
Q

Non-compete contract

A

A contract of employment containing a provision or agreement by which the worker cannot leave to work for a competitor. This may reduce the reservation option of the worker, lowering the wage that the employer needs to pay

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12
Q

complements

A

Two goods for which an increase in the price of one leads to a decrease in the quantity demanded of the other. See also:

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13
Q

Substitutes

A

Two goods for which an increase in the price of one leads to an increase in the quantity demanded of the other

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14
Q

network external effects

A

An external effect of one person’s action on another, occuring because the two are connected in a network

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15
Q

winner-take-all competition

A

Firms entering a market first can often dominate the entire market, at least temporarily

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16
Q

Matching Market

A

A market that matches members of two distinct groups of people. Each person in the market would benefit from being connected to the right member of the other group

17
Q

strategic complements

A

For two activities A and B: the more that A is performed, the greater the benefits of performing B, and the more that B is performed the greater the benefits of performing A