Question 1

As a result of the rapid pace of innovation:
A) product life cycles have become short.
B) product development cycles have become significantly longer.
C) market segmentation has reduced.
D) product obsolescence has slowed down.

Accepted Answer

The rapid pace of innovation has led to the introduction of new products in the market, resulting in shorter product life cycles. Companies need to constantly innovate and upgrade their products to stay ahead of competitors.

Question 2

According to the concept of the innovation funnel,one new idea is usually responsible for several new products.

Accepted Answer

The innovation funnel concept suggests that many ideas are generated, but only a few make it through the development process to become successful products.

Question 3

Which of the following is an advantage of flexible manufacturing technologies?
A) They have made shorter production runs economical.
B) They have increased the importance of production economies of scale.
C) They eliminate the need for differentiation from competitors.
D) They have reduced the importance of technological innovation in industries.

Accepted Answer

One of the advantages of flexible manufacturing technologies is that they have made it possible to produce shorter production runs economically. This allows companies to customize their products to meet specific customer needs without incurring the high costs that were once associated with such customizations.

Question 4

Innovation and new technologies have led to longer product life cycles and slower product obsolescence.

Accepted Answer

Innovation and new technologies often lead to shorter product life cycles and faster product obsolescence, as new and improved products quickly replace older versions.

Question 5

Externalities are costs that are borne by individuals other than those responsible for creating them.

Accepted Answer

This is the definition of externalities as accepted in economics.

Question 6

Which of the following is true of technological innovations?
A) Technological innovations help increase a country's gross domestic product.
B) Technological innovations decrease the amount of output achievable from a given quantity of labor and capital.
C) Technological innovations slow down product obsolescence and lengthen the product development cycles.
D) Technological innovations increase production costs and reduce product differentiation.

Accepted Answer

Technological innovations can lead to increased efficiency, productivity, and competitiveness, which in turn can boost a country's GDP.

Answer: B
 This statement is not true. Technological innovations typically enhance productivity and output, allowing firms to achieve greater results with the same resources.

Answer: C
 Technological innovations can accelerate product obsolescence and shorten product development cycles, as firms must stay competitive by rapidly innovating and bringing new products to market.

Answer: D
 Technological innovations can reduce production costs and increase product differentiation, allowing firms to offer more customized and innovative products at lower costs.

Question 7

Technological innovation results in complete eradication of negative externalities.

Accepted Answer

Technological innovation can certainly help mitigate negative externalities, but complete eradication is unlikely. Some externalities, such as environmental degradation or social disruptions, may have long-lasting or irreparable consequences that cannot be fully reversed through technology alone. Additionally, technological solutions may introduce new unforeseen externalities, creating a never-ending cycle of innovation and adaptation.

Question 8

The majority of effort and money invested in technological innovation comes from nonindustrial firms.

Accepted Answer

The majority of effort and money invested in technological innovation comes from industrial firms, as they usually have larger budgets and greater resources dedicated to research and development. Nonindustrial firms may also invest in innovation, but typically to a lesser extent than their industrial counterparts.

Question 9

Flexible manufacturing technologies have increased the importance of production economies of scale.

Accepted Answer

Flexible manufacturing technologies allow for efficient production of small batches or even individualized products without relying heavily on economies of scale.

Question 10

If a business discharges untreated chemical waste into the local water bodies of a community,it imposes a negative externality on the community members.

Accepted Answer

Discharging untreated chemical waste into local water bodies can harm the health and well-being of community members, as well as damage the local ecosystem. This is a negative externality because the business is not bearing the full cost of their actions, but instead passing on some of the cost to others in the form of environmental and health impacts.

Question 11

Most innovative ideas do not become successful new products.

Accepted Answer

While innovative ideas have the potential to become successful products, the majority of them do not make it to market or fail to gain traction with consumers. Factors such as market demand, competition, and execution can all play a role in determining whether an innovative idea becomes a successful product.

Question 12

GDP does not directly relate to the amount of goods consumers can purchase.

Accepted Answer

GDP, or Gross Domestic Product, measures the total value of all goods and services produced over a specific time period within a country, which indirectly relates to the purchasing power of consumers since a higher GDP suggests more goods and services are available for purchase.

Question 13

According to the concept of innovation funnel,the number of successful products launched will be greater than the number of raw ideas generated.

Accepted Answer

The innovation funnel concept suggests that the number of raw ideas generated at the beginning is much greater than the number of successful products launched, as many ideas are filtered out through various stages of evaluation and development.

Question 14

Technological innovation decreases the amount of output achievable from a given quantity of labor and capital.

Accepted Answer

Technological innovation typically increases the amount of output achievable from a given quantity of labor and capital, not decreases it.

Question 15

The _____ of an economy is its total annual output as measured by its final purchase price.
A) balance of payment
B) gross domestic product
C) cash reserve ratio
D) net national income

Accepted Answer

Gross domestic product (GDP) is a measure of the total value of goods and services produced within a country's borders in a given period of time. It is calculated by adding up all of the final goods and services purchased in the economy. The balance of payment (A) is a record of all transactions between one country and the rest of the world. The cash reserve ratio (C) is the proportion of deposits that banks are required to hold in reserve. Net national income (D) is the total income earned by a country's residents, minus any payments made to foreign entities.

Question 16

A firm's organizational structure and control systems have no influence on the generation of innovative ideas.

Accepted Answer

A firm's organizational structure and control systems can have a significant impact on the generation of innovative ideas. A structure that encourages collaboration, experimentation, and risk-taking can spur innovation, while a rigid or hierarchical structure may stifle it. Similarly, control systems that prioritize short-term financial goals over long-term experimentation may discourage innovative thinking. Therefore, the firm's organizational structure and control systems play a crucial role in facilitating or inhibiting creativity and innovation.

Question 17

The innovation process is often conceived of as a funnel because most potential new product ideas make it through the development process.

Accepted Answer

The innovation process is often conceived of as a funnel because many potential new product ideas are initially considered, but only a small percentage make it through each stage of development to ultimately become a successful product.

Question 18

Virtual Inc.,a manufacturing company,has recently entered the cell phone industry.This industry is characterized by rapid technological innovations.Which of the following is most likely to be true for Virtual?
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 have a lower need for product differentiation.

Accepted Answer

Since the cell phone industry is characterized by rapid technological innovations, Virtual Inc. is most likely to face rapid product obsolescence. This means that their cell phones may quickly become outdated and replaced by newer models, making it important for Virtual Inc. to keep up with technological advancements to stay competitive in the market.

Question 19

Globalization of markets has reduced the importance of innovation.

Accepted Answer

Globalization of markets has actually increased the importance of innovation. With increased competition and a larger market, companies need to constantly innovate to stay ahead and attract customers. Globalization also allows for easier access to new technologies and ideas from around the world, which can enhance innovation.

Question 20

Investing in process innovation helps firms lower their costs.

Accepted Answer

Investing in process innovation can help firms improve their efficiency, reduce waste or rework, and streamline their operations, resulting in lower costs. By employing new or improved methods, technologies, or systems, companies can optimize their production processes, supply chain management, quality control, customer service, or other aspects of their business, which can lead to higher profits or better value for customers. As such, process innovation is a key driver of competitiveness and growth in many industries, particularly those that are heavily regulated, resource-intensive, or subject to rapid change or disruption.

Quiz 1: Introduction

As a result of the rapid pace of innovation: