Question 1
The creation of a new product is called
◦ product innovation.
◦ investment.
◦ creative destruction.
◦ a rise in productivity.
◦ process innovation.
Question 2
Suppose RioTintoAlcan is considering the construction of a new aluminum smelter in Northern Quebec, the operation of which requires a great deal of electricity. Suppose also that the price of electricity is predicted to rise significantly in the near future. As a result, the firm decides to build a plant using existing technology that is more expensive but uses less electricity per tonne of aluminum produced. This behaviour is an example of
◦ short-run cost minimization.
◦ long-run economies of scale.
◦ innovation away from changes in factor prices.
◦ short-run profit maximization.
◦ the long-run principle of substitution.
A mound of buffalo skulls. In 1870 an estimated 30 million buffalo roamed the plains; by 1900 there
Burlington Northern Co., Zephyr #9900.
Northern and Southern Hemispheres