As monopolistically competitive firms struggle to find ways to attract customers, _________. Select the two correct answers below. Select all that apply:

a) they often end up offering friendlier service, free delivery, guarantees of quality, variations on existing products, and a better shopping experience

b) they often engage in innovation and technological improvements

c) they waste resources trying to differentiate themselves

d) they strategically lower their prices to steal customers from their competitors

1. What is a 'technology dead end’? Why are technology dead ends important for economic growth? Illustrate with an example. Hint: Easterly (2002) talks about all this in ch. 9.
2. In your opinion, does intellectual property (i.e. temporary ownership of ideas) incentivize the creation of more new ideas or does it lower the rate of subsequent innovation and creative expression? Explain briefly how or why. Gilbert (2011) may help you think about this.

• Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:
• 1862 Pacific Railway Act
• 1956 Federal Aid Highway Act
• 1946 Federal Airport Act
• What other examples of economic concentration can you share?
• What are the risks and advantages to economic concentration?
• How has economic concentration influenced your industry?

Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:

1862 Pacific Railway Act 1956

Federal Aid Highway Act 1946

Federal Airport Act

What other examples of economic concentration can you share?

What are the risks and advantages to economic concentration?

How has economic concentration influenced your industry?

1. Pick a firm/company/organization from your country, which you are familiar with, explain the contextual influences that can affect its innovation capabilities to compete locally and globally. (1000 words, 70 marks)
2. Explain five ways/ methods the government in your country use to support entrepreneurship. Suggest to your government five methods/ways might/can be used to encourage entrepreneurship in your country. (500 word, 30 marks)

1- Competition among entrepreneurs will result in

Select one:

a. Workers getting paid higher wages than otherwise due to better alternative employment opportunities available.

b. Consumers paying higher prices than otherwise, due to increased cost.

c. Entrepreneurs making higher profits than otherwise due to increased efficiency.

d. Less product innovation than otherwise due to increased cost pressures and lower research budgets.

The escape from the Malthusian trap, in which technological progress outstripped the effects of population growth, took place following the emergence of capitalism. Consider the three basic institutions of capitalism in turn:

1.   Why is private property important for technological progress to occur?

2.   Explain how markets can provide both carrots and sticks to encourage innovation.

3.   How can production in firms, rather than families, contribute to the growth of living standards?

• Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:
  • 1862 Pacific Railway Act
  • 1956 Federal Aid Highway Act
  • 1946 Federal Airport Act
• What other examples of economic concentration can you share?
• What are the risks and advantages to economic concentration?
• How has economic concentration influenced your industry?

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

       Current Year        Previous Year
Sales $450,000 $387,000
Cost of goods sold 270,000 212,850
Selling expenses 72,000 69,660
Administrative expenses 76,500 61,920
Income tax expense 13,500 15,480

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Innovation Quarter Inc.
Comparative Income Statement
For the Years Ended December 31
Current year Amount Current year Percent Previous year Amount Previous year Percent
Sales $450,000 % $387,000 %
Cost of goods sold 270,000 % 212,850 %
$ % $ %
Selling expenses 72,000 % 69,660 %
Administrative expenses 76,500 % 61,920 %
$ % $ %
% %
Income tax expense 13,500 % 15,480 %
$ % $ %

b. The vertical analysis indicates that the cost of goods sold as a percent of sales   by 5 percentage points, while selling expenses   by 2 percentage points, and administrative expenses   by 1 percentage points. Thus, net income as a percent of sales   by 3 percentage points.

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The vertical analysis indicates that the cost of goods sold as a percent of sales   by 8 percentage points, while selling expenses   by 4 percentage points, and administrative expenses   by 1 percentage points. Thus, net income as a percent of sales   by 3 percentage points.