Econ 2302 Final Exam| Verified Solution

ECON 2302 FINAL EXAM| VERIFIED SOLUTION ECONOMICS EXAM 3 1. Technology, R & D, and Efficiency. a. Thoroughly and completely explain Invention Invention is the discovery of a product or process through the use of imagination, ingenious thinking, and experimentation and the first proof that it will work. Usually based on scientific knowledge and is the product of individuals, either working on their own or as members of an organization - R&D staff. We live on a planet with finite resources which makes continued economic growth difficult to maintain. If we are seeing economic growth rates flatten out, please explain how invention might be impacted by a slow growth /no growth economy, and what can we do about this problem? Invention as a result: Invention as a result can be identified as a new and the purpose is beyond its tangible existence. The level of utility is very high. The absence of utility in an invention makes it a mere process not invention. Invention as a process: The idea for an invention may be developed on paper or on a computer, by writing or drawing, by trial and error, by making models, by experimenting, by testing and/or by making the invention in its whole form. Example of example as a result and as a process: The Depression of the 1930’s lasted 11 years and the fact that we are 6 years into the great recession. b- Explain Innovation The introduction of something new draws directly on invention (the discovery and first proof of workability). - For each of the typical types of innovation: 1. Provide 2 examples of each: Product innovation (Mac cosmetics and M&M) and Process innovation (Kroger and Whataburger) 2. Explain how these two types of innovation were used to drive up profits: They use a technological advance like for example Walmart uses advance scanners to sell and process their products, and also, they use new and better goods and services or new and better ways of producing or distributing them. - Explain how our ability to do process and product innovation might be impacted by a slow growth / no growth economy, and what we can do about the problem. The fact to create process innovation can slow growth of economy by the fact that for car assembly line for example because of advance technology they won’t need much people anymore so the unemployment rate will increase. c- Explain Diffusion - Define it: The spread of an innovation through imitation or copying. - Explain how it works: New and existing companies emulate successful innovations of others. - Give 3 examples involving firms that have lead diffusion of some innovation and why these represent good examples of diffusion: Lewis Jeans, Ford. d- You work for Mr. Elon Musk and he has asked you to explain how his company can determine its optimal level of R&D spending. - Please explain the general concept of optimal level of R & D spending. A firm decides of his optimal level of R&D Depends on its perception of MB and MC of R&D, Present sacrifice versus future expected gain. - Explain the marginal cost and marginal benefit components.