In the Model Relating R&D Spending to Output and Output

question 31

Essay

In the model relating R&D spending to output and output to R&D spending, suppose that, for whatever autonomous reason, the home firm desires to spend more on R&D at each level of output. In this model, what does this greater R&D spending by the home firm do to R&D
spending by the foreign firm? Why? Does this result conform to your expectation of foreign firms' reactions in practice to increased R&D spending by home firms? Explain.

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Definitions:

Parallel Circuit

A circuit in which two or more of the connected components or contact symbols in a ladder program are connected to the same pair of terminals so that current may flow through all the branches; contrasted with a series connection, in which the parts are connected end to end so that current flow has only one path.

Series Circuit

A circuit in which the components or contact symbols are connected end to end, and all must be closed to permit current flow.

Series-Parallel Circuit

A circuit configuration that combines elements in both series and parallel to achieve desired electrical characteristics.

NOR Function

A logical operation that produces a true output only when all its inputs are false.