Explain how the firm decides on the optimal amount of research and development
What will be an ideal response?
The optimal amount of research and development for the firm depends on the marginal benefit and marginal cost of R&D activity. To earn the greatest profit, the firm will expand an activity until its marginal benefit equals its marginal cost.
A firm’s marginal cost of these funds is an interest rate i. A firm’s marginal benefit of R&D is its expected profit (or return) from the last dollar spent on R&D. The optimal amount of R&D in marginal cost and marginal benefit analysis is the point where the interest-rate cost-of-funds (marginal cost) curve and the expected-rate-of-return (marginal benefit) curve intersect.
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The income approach to measuring GDP sums together
A) compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. B) compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government. C) the sales of each firm in the economy. D) the costs of each firm in the economy and then subtracts indirect business taxes and depreciation.
Unions often attempt to obtain stricter certification requirements and/or longer apprenticeships. These changes will tend to raise union workers' wages because they
a. create unnecessary unemployment. b. shift the labor supply curve leftward. c. decrease the marginal product of labor. d. increase the demand for the product.
International data on the history of real GDP growth rates shows that over the last 120 years or so, rich countries got richer and poor countries got poorer
a. True b. False Indicate whether the statement is true or false
As of the end of 1994, which of the countries in our survey had the closest match in size between its stock and banking markets?
A) The United Kingdom B) The United States C) Japan D) Germany