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:

Rat

A small rodent known for its importance in scientific research and its ability to adapt to various environments.

Cat

A small domesticated carnivorous mammal with soft fur, a short snout, and retractable claws, known scientifically as Felis catus.

Concrete-Abstract

Refers to the continuum from concrete, tangible concepts to abstract, theoretical ideas or principles.