Suppose that a firm's monthly marginal return from every dollar spend on research & development is equal to: MB = 2 - Q 50 where Q is the monthly sum spent on R&D, in thousands of dollars. An additional benefit of 1- Q /100 is created for all other firms in the industry, due to innovation spillovers. %3D a) How much will this firm choose to spend on R&D each month?
Suppose that a firm's monthly marginal return from every dollar spend on research & development is equal to: MB = 2 - Q 50 where Q is the monthly sum spent on R&D, in thousands of dollars. An additional benefit of 1- Q /100 is created for all other firms in the industry, due to innovation spillovers. %3D a) How much will this firm choose to spend on R&D each month?
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter8: Costs And The Supply Of Goods
Section: Chapter Questions
Problem 3CQ
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![Suppose that a firm's monthly marginal
return from every dollar spend on research
& development is equal to: MB = 2 – Q 50
where Q is the monthly sum spent on R&D,
in thousands of dollars. An additional
benefit of 1- Q /100 is created for all other
firms in the industry, due to innovation
spillovers.
a) How much will this firm choose to spend
on R&D each month?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc1576075-3ada-49bb-94b3-1a5a2b6f855d%2F9d8f3f8f-fb7b-4294-9f9b-eb67be34b7f5%2F02z0uya_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that a firm's monthly marginal
return from every dollar spend on research
& development is equal to: MB = 2 – Q 50
where Q is the monthly sum spent on R&D,
in thousands of dollars. An additional
benefit of 1- Q /100 is created for all other
firms in the industry, due to innovation
spillovers.
a) How much will this firm choose to spend
on R&D each month?
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