Why Is the Percentage of Business Research and Development Spending

question 177

Multiple Choice

Why is the percentage of business research and development spending for basic research so small?

• A) Basic research is the sole responsibility of university research labs.
• B) Scientific knowledge has minimal effect on technological advance.
• C) Scientific principles cannot be easily patented or commercialized.
• D) Basic research is confusing and not well understood by business executives.

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Definitions:

Prices Constant

An assumption in economic analysis that prices remain unchanged over a specific period, allowing for the examination of other variables' effects without price fluctuations.

Diminishing Marginal Rate

The principle that as the quantidade of a variable input increases, with all other inputs fixed, a point will be reached where the additions to output will begin to decrease.

Substitution

The economic principle describing how consumers or producers replace one good or service with another in response to changes in price or other factors.

Substitution Effect

The substitution effect describes a change in consumption patterns due to shifts in relative prices, where consumers prefer cheaper alternatives when the price of a good rises, keeping their utility level constant.