Describe the profit-maximizing firm's decision about how much to spend on innovation
The profit-maximizing firm will decide how much to spend on innovation in the same way it makes its output decision-using marginal analysis. The firm will choose the level of spending on innovation where the MR from innovation equals the MC of innovation. If the firm chooses any other level, either the MR > MC and it could increase profit by spending more, or if MR < MC then it could increase profit by spending less.
You might also like to view...
In a Dutch auction, the higher the bid, the ________ the surplus and the ________ chance of winning
A) higher; lower B) lower; higher C) higher; higher D) lower; lower
If an economy initially starts away from the steady state ________
A) output will gradually fall over time B) the economy will converge to the steady state in the long-run C) consumption spending must be greater than investment spending D) consumption spending must rise
Suppose that consumption spending is $4,200 billion, spending on durable goods is $1,200 billion, and spending on services is $2,000 billion. What does spending on nondurable goods equal?
A) $7,200 billion B) $1,000 billion C) $2,200 billion D) $3,200 billion E) There is not enough information to answer this question.
Which of the following results in a "parallel" shift outward of your indifference curves between gasoline and movie rentals?
A) any decrease in the prices of gasoline and movie rentals B) an equal percentage decrease in the prices of gasoline and movie rentals C) an increase in your income D) none of the above