Suppose that a firm's legal staff concludes that a new production process that the firm is developing is patentable. Graphically, this new information would shift the firm's expected-rate-of-return curve on R&D to the

Question

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The conclusion that the new production process is patentable increases the potential profitability of the R&D investment, shifting the expected-rate-of-return curve to the right and increasing the firm's optimal amount of R&D.

Suppose That a Firm's Legal Staff Concludes That a New