In the Inverted-U Theory of R&D

question 194

Multiple Choice

In the inverted-U theory of R&D,

• A)process innovation and product innovation are inversely related.
• B)technological change is inversely related to scientific discovery.
• C)R&D expenditures rise continuously as a percentage of firms' sales as industry concentration rises.
• D)R&D expenditures first rise as a percentage of firms' sales as industry concentration increases, but then fall as higher industry concentration occurs.

---

Definitions:

Labor Elasticity

The responsiveness of the quantity of labor supplied or demanded to changes in wages or employment conditions.

Deadweight Loss

Is a loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Wine Producers

Businesses or individuals involved in the cultivation of grapes and the production and marketing of wine.

Tax Impact

The effect that taxation has on individual or corporate financial conditions.