Because Firms Can Free Ride on the Research and Development

question 163

Multiple Choice

Because firms can free ride on the research and development of other firms

• A)firms choose a level of research and development where the marginal cost of research is equal to the economy's marginal return of research.
• B)firms choose a level of research and development where the marginal cost of research is above the economy's marginal return of research.
• C)firms choose a level of research and development where the marginal cost of research is below the economy's marginal return of research.
• D)firms choose a level of research and development where the marginal cost of research is below the individual firm's marginal return of research.

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Definitions:

Standard Normal Distribution

A normal distribution with a mean of 0 and a standard deviation of 1, serving as a basis for comparison for other distributions.

Mean

The arithmetic average of a set of values, calculated by adding all the values together and dividing by the number of values.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; a low standard deviation means the values are close to the mean, while a high standard deviation means the values are dispersed over a wider range.

Standard Normal Random Variable

A random variable with a mean of zero and a variance of one, following the standard normal distribution.