Because Knowledge Capital Is Nonexcludable and Nonrival,firms Have an Incentive

question 102

Multiple Choice

Because knowledge capital is nonexcludable and nonrival,firms have an incentive to ________ the research and development of other firms.

• A)make bids on
• B)not use
• C)ignore
• D)free ride on

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Definitions:

Amortization

The process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.

Pure Endowment

An insurance policy where the insurer agrees to pay a specified sum of money at the end of a determined period on the condition that the insured is still alive.

Quasi-Endowment

Funds that are not permanently restricted under the terms of the gift but are designated by the governing board to function as an endowment, thus not easily expendable for general operations.

Liquid Assets

Assets that can be quickly and easily converted into cash without significantly affecting their value.