Describe the profit-maximizing firm’s decision about how much to spend on innovation.
What will be an ideal response?
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.
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If two alternative economic models are offered, other things equal, we would
a. tend to pick the one with the lowest R2. b. select the model that is the most expensive to estimate. c. pick the model that was the most complex. d. select the model that gave the most accurate forecasts e. all of the above
An example of organizational architecture based on customer location is when divisions are defined as
a. R&D, Engineering, Production, Marketing, Sales b. Component 1 Plant, Component 2 Plant, Component 3 Plant, Final Assembly c. Store 1, Store 2, Store 3, Region A, Region B, Sales Division d. Business Customers, Educational Customers, Household Customers