1. Technology, R & D, and Efficiency. a. Thoroughly and completely explain Invention i. Distinguish between invention as a process and invention as a result. 1. Should be pretty straight forward. Invention is a creation of a new idea which is patentable, unusual, and has a new trait. It is a change from the status quo. The change is meaningful when it affects a product, service, or business operations. Invention is a process of creating something new or something which has not been created by anyone before. Innovation is modifying or making or deriving new products from an existing product or technology. In the case of invention, new product or technology is created. A sophisticated machine that automatically performs all the household chores. On the other hand, there is no creation of new goods/ products or techniques in innovation. For example, first a normal washing machine, then came semi-automatic then finally it became, fully automatic. The basic similarity between invention and innovation is that, they have reduced human labor, which can be positive or negative aspect. Thus invention comes first and innovation follows. Cognitive realization of weakness in the existing idea or a need for change leads to the process of invention. It either absorbs the existing idea or creates a new process which leads to invention. The second stage in the process is facultative process. The conceived process in the stage 1 are experimented in the stage 2. The thoughts go under many iteration process and observation. It refines the existing process and process leads to a new idea. 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. ii. 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? Be specific. 1. Discuss invention as a process and compare that to invention as a result. Give 2 examples of each, and discuss how each might be affected by a slow growth / no growth economy. b. Explain Innovation. i. What is it? ii. For each of the typical types of innovation: 1. Provide 2 examples of each (that were not included in the slides or audio) and explain why these are good examples of those types of innovation. 2. Explain how these two types of innovation were used to drive up profits. a. Discuss the 2 key factors required to drive up profits – drive down costs and drive up revenues. b. Might want to include how new products gain customer acceptance, including the importance of the relationship between price and utility. c. Process innovation is often used to get leverage on lowering costs, might want to discuss how impacts total product, ATC, a ...

1. 1. Technology, R & D, and Efficiency.
a. Thoroughly and completely explain Invention
i. Distinguish between invention as a process and invention as a
result.
1. Should be pretty straight forward.
Invention is a creation of a new idea which is patentable,
unusual, and has a new trait. It is a change from the status quo.
The change is meaningful when it affects a product, service, or
business operations. Invention is a process of creating
something new or something which has not been created by
anyone before. Innovation is modifying or making or deriving
new products from an existing product or technology. In the
case of invention, new product or technology is created. A
sophisticated machine that automatically performs all the
household chores. On the other hand, there is no creation of new
goods/ products or techniques in innovation. For example, first
a normal washing machine, then came semi-automatic then
finally it became, fully automatic. The basic similarity between
invention and innovation is that, they have reduced human
labor, which can be positive or negative aspect. Thus invention
comes first and innovation follows. Cognitive realization of
weakness in the existing idea or a need for change leads to the
process of invention. It either absorbs the existing idea or
creates a new process which leads to invention. The second
stage in the process is facultative process. The conceived
process in the stage 1 are experimented in the stage 2. The
thoughts go under many iteration process and observation. It
refines the existing process and process leads to a new idea.
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.
ii. We live on a planet with finite resources which makes

2. 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? Be specific.
1. Discuss invention as a process and compare that to invention
as a result. Give 2 examples of each, and discuss how each
might be affected by a slow growth / no growth economy.
b. Explain Innovation.
i. What is it?
ii. For each of the typical types of innovation:
1. Provide 2 examples of each (that were not included in the
slides or audio) and explain why these are good examples of
those types of innovation.
2. Explain how these two types of innovation were used to drive
up profits.
a. Discuss the 2 key factors required to drive up profits – drive
down costs and drive up revenues.
b. Might want to include how new products gain customer
acceptance, including the importance of the relationship
between price and utility.
c. Process innovation is often used to get leverage on lowering
costs, might want to discuss how impacts total product, ATC,
and profit.
d. Some of the process innovations of Wal-Mart might be good
to look into.
iii. 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.
1. How is innovation impacted during times of slow growth or
no growth?
2. May have to consider what is required to actually deliver
innovations to the market.
c. Explain Diffusion.
i. Define it,

3. ii. Explain how it works,
iii. Give 3 examples involving firms that have lead diffusion of
some innovation and why these represent good examples of
diffusion,
iv. Discuss how diffusion might be affected by a slow growth /
no growth economy.
1. Since diffusion is not free, how might it be impacted by
economies that are not growing or only growing slowly?
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.
i. Please explain the general concept of optimal level of R & D
spending
ii. Explain the marginal cost and marginal benefit components
1. You have a good list of items in the slide set – just need to
provide explanations of the items.
iii. Explain how the optimal level of R & D spending is
computed.
1. Feel free to use graphs to support your explanation.
2. Don’t forget to let him know that returns are expected, not
guaranteed.
2. Technology, R & D, and Efficiency.
You are a business manager for Coca Cola and some new
competitive soft drinks are being introduced with great
customer acceptance.
a. Explain to your boss the fast second strategy.
b. Why and how Coke would use the fast second strategy to
increase its economic profit
i. Discuss the why
ii. Discuss the how
iii. List and discuss 2 examples.

4. c. Explain to your boss how Coke can use the protection
provided by patents, copyrights, and trademarks to increase
their economic profits.
i. Discuss what each of the 3 protections apply to, and
ii. Discuss how each will help a firm achieve economic profits.
d. Explain to your boss how Coke can use their Brand to
increase their economic profits.
i. Discuss the following and each can be used to increase a
firms economic profit:
1. Brand-name recognition
2. Brand equity
3. Brand promise
4. Brand personality
e. Explain to your boss how technological advance increases
productive efficiency and allocative efficiency.
i. Discuss the impact of technological advancements on
productive and allocative efficiency.
3. The demand for resources
a. You are an Economics teacher. Please explain to your class
the significance of resource pricing on resource allocation
among:
i. Firms and industries,
ii. The determination of income,
iii. Include the impacts on the ability of a firm to achieve cost
minimization.
1. Discuss how resource prices affect the ability of firms in an
industry relative to their ability to acquire resources and the
subsequent impact on output,
2. Discuss the impact of resource prices on the determination of
income that results from the sale of those resources.
3. Discuss the impact of resources prices on the ability of firms
to minimize costs.

5. b. Explain to the class the marginal productivity theory of
resource demand and why businesses care about it.
i. State the assumptions
ii. Explain MRP and MRC, and the firms’ rule for employing
resources
iii. Be sure to explain the terms and what they mean to a
business.
c. The determinants of resource demand.
i. Discuss the 3 determinants of resource demand
1. Changes in product demand
2. Changes in productivity
a. Quantities of other resources
b. Technological advance
c. Quality of the variable resources
3. Changes in the prices of other resources including:
a. The case of substitute resources – the substitution effect and
the output effect
b. The case of compliments
4. The demand for resources.
a. Please thoroughly explain the determinants of the elasticity
of resource demand.
i. Discuss the following:
1. Ease of resource substitutability
2. Elasticity of product demand
3. Ratio of resource cost to total cost
b. Please explain how a firm would determine the optimal
combination of resources required to produce a given level of
output.
i. Discuss / explain.
5. Government Regulation of business:
a. List and explain 4 reasons in favor of federal government
regulation of business and 4 reasons against federal government
regulation of business. Include the economic consequences of

6. each for the economy and you individually.
i. You should be able to provide this. Might require a little
research.
b. Explain why the effectiveness of antitrust laws changes
through time.
i. Discuss the role of politics and elections
c. Explain Industrial Regulation (purpose, problems, and
economic impacts) and Social Regulation (purpose, problems,
and economic impacts)
i. Pretty straight forward
6. Income inequality
a. Please explain the factors that have contributed to increased
income inequality since 1969,
i. Discuss each of the following as it contributes to increased
income inequality.
1. Greater demand for high skilled workers
2. Demographic changes
3. International trade, immigration, and the decline of unionism
4. The great recession of 2007
5. Any other factors that you can identify
b. What are 6 results of the growing income inequality in
America and what can we do to correct this growing problem?
i. For each of the items listed above, discuss what might be
done to eliminate the problems that cause growing income
inequality
c. Explain how discrimination reduces domestic output and
income,
i. Look at the items under Discrimination in the notes and
discuss how each contributes to the reduction of domestic
output and income.
d. Explain the difference between Social Insurance Programs

7. and Public Assistance Programs, and give 3 examples of each.
i. Social Insurance
1. What is it?
2. Explain the 3 examples relative to what they do for the
beneficiaries of each program.
ii. Public Assistance
1. What is it?
2. Explain 3 of the examples relative to what they do for the
beneficiaries of each program.
e. Discuss the pros and cons of reducing spending on these two
types of programs relative to stimulating economic growth.
i. Some Google research should help with this.
7. On the subject of Poverty
a. Define poverty – check definition in notes, check google as
well
b. Explain 5 factors that have contributed to the significant
increase in the number of people in poverty today.
1. A bit of Google research should provide additional
information.
c. Explain 5 things that need to be done to significantly reduce
the number of people in poverty going forward.
1. Should be able to create some good ideas.