marginal cost is less than the marginal benefit. Thus. R&D spending should be re

Question

marginal cost is less than the marginal benefit. Thus. R&D spending should be reduced.

marginal cost is less than the marginal benefit. Thus, R&D spending should be increased.

marginal cost is greater than the marginal benefit. Thus, R&D spending should be reduced.

marginal cost is greater than the marginal benefit. Thus, R&D spending should be increased.

i,r 15 12 6 3 10 20 30 40 50 60 R&D; Expenditures ($M) In the graph, the difference between points d and e indicates that at $50M of R&D; spending, the

Explanation / Answer

now here we can see that at 50M of r and d spendings,

the marginal benefit curve which is the downward sloping curve is lying below the marginal cost curve, so benefits are less than the cost thus the spendings should be reduced,

so answer is "marginal cost is greater than the marginal benefit. Thus, R&D spending should be reduced."

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