Available studies show that if the largest firms in a market of a given size were replaced by a larger number of smaller firms
A) the rate of technological change would decline substantially.
B) total research and development expenditures would decrease.
C) the commercial introduction of innovation that requires a large amount of capital might slow down.
D) there would be a noticeable decline in the riskiness of research and development activities.
E) federal funding for research and development would automatically increase.

Question

Quizplus · Accepted Answer

Larger firms have more resources to invest in capital-intensive innovations, so replacing them with smaller firms would likely slow down the introduction of innovation that requires a large amount of capital. The other options are unsupported or contradictory to what is generally observed in the market.

Available Studies Show That If the Largest Firms in a Market