Which of the Following Government Policies Discourages Technological Innovation

question 6

Multiple Choice

Which of the following government policies discourages technological innovation?

• A) research and development tax credits
• B) expansion of relevant work in government laboratories
• C) grants and contracts from government agencies to support civilian technology
• D) measures to reduce after-tax costs of plant and equipment
• E) encouragement of higher rates of inflation to promote rising profits

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Definitions:

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others.

Opportunity Costs

The cost of forgoing the next best alternative when choosing among multiple options, measuring the trade-off involved in any decision.

Opportunity Cost

The value of the best alternative forgone when a choice is made, representing the benefits one could have received by taking an alternative action.

Gains From Trade

The benefit that entities receive from engaging in voluntary trade, often resulting in better allocation of resources and increased efficiency.