Question

In: Economics

-Which of the following is true about general knowledge? It is not excludable but rival in...

-Which of the following is true about general knowledge?

It is not excludable but rival in consumption.

It is both excludable and rival in consumption.

It is neither excludable nor rival in consumption.

It is excludable and not rival in consumption.

-As a result, private firms Would/Would not undertake the efficient amount of basic scientific research.

-Which of the following policies has the United States adopted in response to this problem? Check all that apply.

Subsidizing research through the National Institutes of Health

Taxing revenue from the National Science Foundation

A progressive income tax

It is often argued that this policy increases the technological capability of American producers relative to that of foreign firms.

-True or False: This argument is correct only if the knowledge provided by basic research is not rival in consumption.

Solutions

Expert Solution

Which of the following is true about general knowledge?

It is neither excludable nor rival in consumption.

Explanation: it is not possible to with-hold general knowledge from some parties so it is non-excludable. Also, there is no additional cost for providing general knowledge to an additional person, so it is non-rival.

-As a result, private firms Would/Would not undertake the efficient amount of basic scientific research.

Ans. Would not

Explanation: There would be the problem of less than efficient amoutn of research due to free-rider problem.

-Which of the following policies has the United States adopted in response to this problem?

Subsidizing research through the National Institutes of Health

Explanation: Subsidizing research would lead to movement towards socially optimum level of scientific research.

It is often argued that this policy increases the technological capability of American producers relative to that of foreign firms.

-True or False: This argument is correct only if the knowledge provided by basic research is not rival in consumption.

Ans. True

If knowledge was rivan in consumption it would mean that the MC would be increasing.


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