Suppose scientific research generates external benefits. Without government intervention, the market for scientific research would
A) produce the efficient amount.
B) produce more than the efficient amount.
C) produce some research, but less than the efficient amount.
D) produce zero research.
E) either produce more than or less than the efficient amount depending on whether the external benefit is on the production or consumption of the research.
C
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Suppose the Christmas trees market is perfectly competitive. A business owner is currently suffering from a loss of $1,000, the cost of producing and selling an additional Christmas tree is $20, and the current market price is $25. The owner
A) should sell more trees. B) should shut down his business now. C) should advertise in the market. D) is already minimizing his loss.
Which of the following is not true about the law of diminishing returns?
A) It is a short-run phenomenon. B) It refers to diminishing marginal product. C) It will have an impact on the firm's marginal cost. D) It divides Stage I and II of the production process. E) All of the above are true.