The Argument That Concentration of Market Power Enhances Research and Development

question 28

Multiple Choice

The argument that concentration of market power enhances research and development efforts may be weak because:

• A) Monopolies cannot afford basic research.
• B) No one has attempted to gather any empirical evidence.
• C) A monopoly may have no clear incentive to pursue new research and development.
• D) No existing monopoly has a research and development program.

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Variable Costing

A pricing approach that incorporates only variable production expenses—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of products.

Absorption Costing

A costing method that assigns all manufacturing costs, both fixed and variable, to products.

Net Income

The total earnings of a company after subtracting all expenses from revenue.