If the government wants to encourage spending on research and development, it should
a. reduce patent protection so many individuals can use new products in their own research
b. shorten the number of years during which a developer has exclusive patent rights to market an invention
c. increase the number of years during which an inventor has exclusive patent rights to market an invention
d. raise tax rates on corporate profits to raise money for the research
e. encourage firms and households to spend money instead of saving it
C
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Sometimes a change in the real effective multilateral exchange rate has the opposite result from what one would expect. One explanation may be:
a. that buying habits are very strong and firms and consumers continue their behavior despite large changes in prices of imports. b. that price changes do not bring about immediate responses in import or export volume because of contracts, or firms' difficulty in changing suppliers quickly. c. that the theory is fundamentally flawed and does not predict well. d. that there are other factors we are not considering that affect the trade balance.
If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza, then the price elasticity of demand for pizza:
a. is equal to 0.5 and demand for pizza is inelastic. b. is equal to 0.5 and demand for pizza is elastic. c. is equal to 2 and demand for pizza is elastic. d. is equal to 2 and demand for pizza is inelastic. e. cannot be determined from the information provided.