University Researchers Create a Positive Externality Because What They Discover

question 372

Multiple Choice

University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs. Suppose that the federal government gives grants to these researchers equal to the their per-unit production externality. What is the relationship between the equilibrium quantity of university research and the socially optimal quantity of university research produced?

• A)The equilibrium quantity is greater than the socially optimal quantity.
• B)They are equal.
• C)The equilibrium quantity is less than the socially optimal quantity.
• D)There is not enough information to answer the question.

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Definitions:

Sinusoids

Specialized, capillary-like vessels that are larger and more permeable, found in certain organs like the liver, spleen, and bone marrow, facilitating blood flow and exchange of nutrients.

Liver

A large vital organ in vertebrates responsible for detoxification, protein synthesis, and biochemical production necessary for digestion and metabolism.

Goblet Cells

Specialized epithelial cells found in the respiratory and intestinal tracts, secreting mucus to lubricate and protect the mucous membranes.

Granular Cells

Cells containing granules that release substances involved in various bodily functions, such as inflammation or blood pressure regulation.