If the Government Wants to Encourage Spending on Research and Development,it

question 20

Multiple Choice

If the government wants to encourage spending on research and development,it should

• A) reduce patent protection so many individuals can use new products in their own research
• B) shorten the number of years during which a developer has exclusive patent rights to market an invention
• C) increase the number of years during which an inventor has exclusive patent rights to market an invention
• D) raise tax rates on corporate profits to raise money for the research
• E) encourage firms and households to spend money instead of saving it

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Definitions:

Cost-plus Pricing

Pricing strategy where a fixed percentage is added to the total cost of making a product to determine its selling price.

Required Rate of Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Contribution Margin

Contribution margin is the amount by which sales revenue exceeds variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Production Constraint

Any factor that limits the output of a production process, such as limited machine capacity or shortages of materials or labor.