Chapter 01
Multiple Choice
17. Technological innovations decrease:
a. the variety of goods consumers can purchase.
b. the need for differentiation among competitors.
c. the time required to design and produce new products.
d. the use of common components between different models of the same product.
Answer: c
Difficulty: Easy
18. As a result of the rapid pace of innovation:
a. product life cycles have become short.
b. product development cycles have become long.
c. market segmentation has reduced.
d. product obsolescence has slowed down.
Answer: a
Difficulty: Easy
19. The _____ of an economy is its total annual output, measured by the final purchase
price.
a. balance of payment
b. gross domestic product
c. cash reserve ratio
d. net national income
Answer: b
Difficulty: Easy
20. Which of the following is true of technological innovations?
b. Technological innovations decrease the amount of output achievable from a given
quantity of labor and capital.
c. Technological innovations slow down the product development cycles and product
obsolescence.
d. Technological innovations increase production costs and reduce product
differentiation.
Answer: a
Difficulty: Easy
21. Virtual Inc., a manufacturing company, has recently entered into the cell phone
industry. This industry is characterized by rapid technological innovations. Which of the
following is an implication for Virtual Inc.?
a. The life cycle of its cell phones will be very long.
b. It will face rapid product obsolescence.
c. It will face low market segmentation in the cell phone industry.
d. It will face lower need for product differentiation.
Answer: b
Difficulty: Hard
22. Technological innovations increase:
,a. the gross domestic product of an economy.
b. product life cycles.
c. the time required for product development and introduction.
d. the production costs of multiple product variations.
Answer: a
Difficulty: Medium
4,867 billion USD.
a. total annual output
b. investment on technological innovation
c. savings with the World Bank
d. negative variance in budget
Answer: a
Difficulty: Medium
24. The Solow Residual refers to the:
a. obsolete products left in the market due to the accelerated product life cycle.
b. less developed nations of the world being left behind due to their obsolete
technology.
c. increased amount of output achievable from a given quantity of labor and capital due
to technological innovation.
d. process of dumping goods in developing and underdeveloped countries at a price
lower than the home-market price.
Answer: c
Difficulty: Medium
25. _____ refer to costs (or benefits) of technological innovations that are borne by
individuals other than those responsible for creating them.
a. Externalities
b. Innovation funnels
c. Opportunity costs
d. Cultural lags
Answer: a
Difficulty: Easy
26. Silk Work Inc., a manufacturer of silk garments, is planning to replace hand weaving
with some modern machines that run on fuel. Which of the following consequences of
this measure can be categorized as a negative externality?
a. Increased amount of output achievable from the given quantity of labor
b. Increase in the quality of the silk garments
c. Increased pollution as a result of the new technology
d. Increased need for investment to finance the modernization
Answer: c
Difficulty: Medium
27. Technology is in its purest essence _____.
a. knowledge
b. trial and error
,c. experimentation
d. guesswork
Answer: a
Difficulty: Medium
28. If a business builds a park in a community, it creates a(n) _____ for community
members.
a. social cost
b. positive externality
c. opportunity cost
d. negative variance
Answer: b
Difficulty: Medium
29. Which of the following is true of externalities?
a. All externalities are negative in nature.
b. They are only borne by individuals responsible for creating them.
c. Technological innovation results in complete eradication of negative externalities.
d. Externalities can be in the form of benefits reaped by individuals.
Answer: d
Difficulty: Medium
30. Electronic waste results from the disposal of technological goods. This is an example
of:
a. the opportunity cost borne by the companies.
b. a negative externality.
c. a negative variance.
d. the innovation funnel.
Answer: b
Difficulty: Easy
31. The innovation process is often conceived of as a funnel because:
a. most innovative ideas become successful new products.
b. it decreases the amount of output achievable from a given quantity of labor and
capital.
c. it increases the importance of production economies of scale.
d. there are many potential new product ideas and only a few make it through the
development process.
Answer: d
Difficulty: Easy
32. Jordan, the CEO of Early Bird, believes that it is important to focus on the quantity of
new product ideas generated rather than the quality of ideas generated. He encourages
everyone in the company to come up with product ideas, and those that seem feasible
are further developed. According to him, it takes several raw ideas to develop one
a. innovation quotient.
b. innovation diffusion.
c. innovation readiness.
, d. innovation funnel.
Answer: d
Difficulty: Hard
33. Unicorn Medicines, a pharmaceutical company based in the United States, has its
research and development units spread across the globe. These research and
development units have lately not been receiving adequate financial support. Which of
the following is typically the cause for such a situation?
a. Technical innovation leads to lower market segmentation and slower product
obsolescence.
b. Most innovative ideas do not become successful new products.
c. The product development cycle in the pharmaceutical industry is short.
d. The cost associated with pharmaceutical research and development is low.
Answer: b
Difficulty: Hard
34. Walter is the new director of R&D at Good Health, a pharmaceutical company.
Which of the following statements, made by Walter, indicates that he believes in the
concept of the innovation funnel?
very few
make it to the devel
Answer: b
Difficulty: Hard
35. The innovation process at Jupiter Inc. starts with the generation of raw ideas,
followed by development of small projects, which later become major developments,
and the process finally ends with product launches. According to the concept of
a. raw ideas generated.
b. product launches.
c. major developments.
d. small projects.
Answer: a
Difficulty: Medium
Multiple Choice
17. Technological innovations decrease:
a. the variety of goods consumers can purchase.
b. the need for differentiation among competitors.
c. the time required to design and produce new products.
d. the use of common components between different models of the same product.
Answer: c
Difficulty: Easy
18. As a result of the rapid pace of innovation:
a. product life cycles have become short.
b. product development cycles have become long.
c. market segmentation has reduced.
d. product obsolescence has slowed down.
Answer: a
Difficulty: Easy
19. The _____ of an economy is its total annual output, measured by the final purchase
price.
a. balance of payment
b. gross domestic product
c. cash reserve ratio
d. net national income
Answer: b
Difficulty: Easy
20. Which of the following is true of technological innovations?
b. Technological innovations decrease the amount of output achievable from a given
quantity of labor and capital.
c. Technological innovations slow down the product development cycles and product
obsolescence.
d. Technological innovations increase production costs and reduce product
differentiation.
Answer: a
Difficulty: Easy
21. Virtual Inc., a manufacturing company, has recently entered into the cell phone
industry. This industry is characterized by rapid technological innovations. Which of the
following is an implication for Virtual Inc.?
a. The life cycle of its cell phones will be very long.
b. It will face rapid product obsolescence.
c. It will face low market segmentation in the cell phone industry.
d. It will face lower need for product differentiation.
Answer: b
Difficulty: Hard
22. Technological innovations increase:
,a. the gross domestic product of an economy.
b. product life cycles.
c. the time required for product development and introduction.
d. the production costs of multiple product variations.
Answer: a
Difficulty: Medium
4,867 billion USD.
a. total annual output
b. investment on technological innovation
c. savings with the World Bank
d. negative variance in budget
Answer: a
Difficulty: Medium
24. The Solow Residual refers to the:
a. obsolete products left in the market due to the accelerated product life cycle.
b. less developed nations of the world being left behind due to their obsolete
technology.
c. increased amount of output achievable from a given quantity of labor and capital due
to technological innovation.
d. process of dumping goods in developing and underdeveloped countries at a price
lower than the home-market price.
Answer: c
Difficulty: Medium
25. _____ refer to costs (or benefits) of technological innovations that are borne by
individuals other than those responsible for creating them.
a. Externalities
b. Innovation funnels
c. Opportunity costs
d. Cultural lags
Answer: a
Difficulty: Easy
26. Silk Work Inc., a manufacturer of silk garments, is planning to replace hand weaving
with some modern machines that run on fuel. Which of the following consequences of
this measure can be categorized as a negative externality?
a. Increased amount of output achievable from the given quantity of labor
b. Increase in the quality of the silk garments
c. Increased pollution as a result of the new technology
d. Increased need for investment to finance the modernization
Answer: c
Difficulty: Medium
27. Technology is in its purest essence _____.
a. knowledge
b. trial and error
,c. experimentation
d. guesswork
Answer: a
Difficulty: Medium
28. If a business builds a park in a community, it creates a(n) _____ for community
members.
a. social cost
b. positive externality
c. opportunity cost
d. negative variance
Answer: b
Difficulty: Medium
29. Which of the following is true of externalities?
a. All externalities are negative in nature.
b. They are only borne by individuals responsible for creating them.
c. Technological innovation results in complete eradication of negative externalities.
d. Externalities can be in the form of benefits reaped by individuals.
Answer: d
Difficulty: Medium
30. Electronic waste results from the disposal of technological goods. This is an example
of:
a. the opportunity cost borne by the companies.
b. a negative externality.
c. a negative variance.
d. the innovation funnel.
Answer: b
Difficulty: Easy
31. The innovation process is often conceived of as a funnel because:
a. most innovative ideas become successful new products.
b. it decreases the amount of output achievable from a given quantity of labor and
capital.
c. it increases the importance of production economies of scale.
d. there are many potential new product ideas and only a few make it through the
development process.
Answer: d
Difficulty: Easy
32. Jordan, the CEO of Early Bird, believes that it is important to focus on the quantity of
new product ideas generated rather than the quality of ideas generated. He encourages
everyone in the company to come up with product ideas, and those that seem feasible
are further developed. According to him, it takes several raw ideas to develop one
a. innovation quotient.
b. innovation diffusion.
c. innovation readiness.
, d. innovation funnel.
Answer: d
Difficulty: Hard
33. Unicorn Medicines, a pharmaceutical company based in the United States, has its
research and development units spread across the globe. These research and
development units have lately not been receiving adequate financial support. Which of
the following is typically the cause for such a situation?
a. Technical innovation leads to lower market segmentation and slower product
obsolescence.
b. Most innovative ideas do not become successful new products.
c. The product development cycle in the pharmaceutical industry is short.
d. The cost associated with pharmaceutical research and development is low.
Answer: b
Difficulty: Hard
34. Walter is the new director of R&D at Good Health, a pharmaceutical company.
Which of the following statements, made by Walter, indicates that he believes in the
concept of the innovation funnel?
very few
make it to the devel
Answer: b
Difficulty: Hard
35. The innovation process at Jupiter Inc. starts with the generation of raw ideas,
followed by development of small projects, which later become major developments,
and the process finally ends with product launches. According to the concept of
a. raw ideas generated.
b. product launches.
c. major developments.
d. small projects.
Answer: a
Difficulty: Medium
