Asked by reddy chittamuru on May 12, 2024
Verified
Because of the kind of externalities that tend to be generated from general R&D resources bought by firms, the equilibrium price of R&D:
A) is above the optimal level, and quantity is below the optimal level.
B) is below the optimal level, and quantity is above the optimal level.
C) and quantity of R&D are both above the optimal level.
D) and quantity of R&D are both below the optimal level.
E) must fall in order for the market to reach equilibrium.
Equilibrium Price
The price at which the quantity of goods supplied equals the quantity of goods demanded in a market.
General R&D
Research and development activities aimed at broadening knowledge or creating new theories, rather than focusing on specific applications.
Externalities
Economic side effects or consequences of commercial activities that affect other parties without this being reflected in market prices.
- Evaluate the role of government interventions, such as emissions fees and standards, in correcting market failures due to externalities.
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Learning Objectives
- Evaluate the role of government interventions, such as emissions fees and standards, in correcting market failures due to externalities.
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