Asked by Tmobile Oakland on Jul 02, 2024
A firm's optimal amount of R&D occurs where the marginal benefit of this activity exceeds marginal cost by the greatest amount.
Marginal Benefit
The increase in satisfaction or utility that a person receives from consuming an additional unit of a good or service.
Optimal Amount
The ideal quantity of a good or resource that maximizes efficiency or value.
R&D
Stands for Research and Development, a business or government activity that involves the investment of resources in developing new products, services, or processes.
- Identify the optimal level of R&D expenditure for firms based on marginal cost and benefit analysis.
Learning Objectives
- Identify the optimal level of R&D expenditure for firms based on marginal cost and benefit analysis.
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