The "inverted-U theory" of R&D shows the relationship between
A) marginal benefit and marginal cost of R&D.
B) number of R&D projects and the sources of R&D funds.
C) R&D expenditures and expected return.
D) market concentration ratio and R&D expenditures.

Question

Quizplus · Accepted Answer

The "inverted-U theory" suggests that there is an optimal level of market concentration that maximizes R&D expenditures. Initially, as market concentration increases, R&D expenditures also increase, but after a certain point, further increases in concentration lead to a decrease in R&D expenditures.

The "Inverted-U Theory" of R&D Shows the Relationship Between