In the Romer model. as more labor is devoted to research and development ________

A) there is an immediate decrease in output per capita
B) there is an immediate increase in output per capita
C) output per capita is unaffected, but the savings rate begins to rise
D) output per capita is unaffected, but the savings rate begins to fall


A

Economics

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A. the firm produces a level of output smaller than would be produced without the external cost. B. the firm produces a level of output larger than would be produced without the external cost. C. the firm produces a level of output which would be the same as it would produce without the external cost. D. the market provides the efficient level of output even with the existence of the external cost.

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