What calculation determines the optimal amount of research and development for the firm? Why is this decision a complex one?
What will be an ideal response?
It is based on an assessment of marginal benefit and marginal cost. The amount of activity should be expanded until the marginal benefit is just equal to the marginal cost. Of course, making such an assessment is complex because the calculation of the benefits typically lies in the future and the calculation of costs is often incurred in the present.
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In the above figure, if the price of pizza falls, the budget line
A) rotates outward and becomes steeper. B) shifts leftward and its slope does not change. C) shifts rightward and its slope does not change. D) rotates inward and becomes flatter.
A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:
a. average total cost curve. b. average variable cost curve. c. average fixed curve. d. average price curve.
Negative externalities lead to over supply in a market
Indicate whether the statement is true or false
During the Revolutionary War, the Pennsylvania legislature attempted to help the Continental Army by enacting
a. wage floors for soldiers in the army. b. bonuses for soldiers who re-enlisted. c. laws to buy food for the soldiers stationed in Pennsylvania. d. price controls on essential commodities. e. All of the above are correct.