Related to the Economics in Practice on P

question 138

Multiple Choice

Related to the Economics in Practice on p. 304: According to a study cited in the Economics in Practice, if a country is relatively far from the technological frontier of the rest of the world, what would be its best strategy?

• A) The government needs to keep helping its firms find the world frontier until the firms reach the frontier.
• B) The government should begin by offering incentives and encourage some risk taking.
• C) The government needs to help its firms find the world frontier, and then as firms approach the frontier, the government should offer incentives and encourage some risk taking.
• D) The government should adopt a hands-off approach and let the private sector bring the country to the world frontier.

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Definitions:

Processing Activity

Tasks or operations involved in transforming raw materials into finished goods or services, often part of the production process.

Activity-Based Costing

A costing methodology that assigns expenses to products or services based on the activities that go into their production or delivery.

Machine-Hours

A unit of measure representing the operating time of a machine, used in cost accounting to allocate machine-related overheads to products.

Product Margin

The profit made on selling a product, calculated by deducting the total cost of production from the sales revenue of the product.