How Can a Government Reduce the Private Marginal Cost of Research

question 42

Multiple Choice

How can a government reduce the private marginal cost of research and development for a firm? I. Offer the firm tax breaks for research and development expenses. II. Subsidize the firm's research and development process. III. Lower the social benefits of research and development.

• A) I only
• B) I and II only
• C) III only
• D) I, II, and III

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Definitions:

Allocated

Assigned or designated resources (such as costs or revenues) to a specific segment, project, or period.

Plantwide Factory Overhead Rate

A single overhead absorption rate used throughout a manufacturing facility to allocate indirect costs to products.

Overhead

Overhead refers to ongoing business expenses not directly attributed to the production of goods or services, such as rent, utilities, and administrative costs.

Production Department

The division of a business focused on the creation and manufacture of goods.