Why might many R&D expenditures be affordable, but not worthwhile? Are outcomes from R&D guaranteed?
What will be an ideal response?
R&D expenditures can be justified only if the expected return equals or exceeds the cost of financing them. If the marginal benefit of an R&D expenditure is less than the marginal cost, then the expenditure may be affordable but it is not worthwhile. The firm expects positive outcomes from R&D, but the results are not guaranteed. Obviously, an R&D expenditure has an element of risk that it will not prove to be profitable no matter how much planning was done or prior information was obtained before making the investment decision. It is the potential for success, not the guarantee of it, which is the driving force behind the final decision.
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Which of the following describes the asymmetry Moncur Olson observed in the incentives to support and oppose trade policy?
A) The benefits of those seeking protection outweigh the costs imposed by the protection. B) The benefits of protection are spread out over a large number of firms and industries, but the costs are concentrated on consumers. C) The benefits of policy are concentrated, and the costs are spread out over a large number of participants. D) The costs of protection are concentrated on a few firms, and the benefits of protection are spread out over a large number of consumers.
The alternate-section provision was designed to:
a. allow the government to share in increased land values resulting from railroad building. b. encourage private businesses to locate along railroad routes. c. discourage farmers from cultivating crops near railroad routes. d. make railroad stations more accessible to families.