If technological progress involves positive externalities,then private sector spending on research and development may be:

Question

Quizplus · Accepted Answer

Positive externalities imply that the benefits of technological progress exceed the private benefits received by firms that invest in R&D. This means that firms may not invest enough in R&D because they do not capture all the benefits from their investments. As such, private sector spending on R&D may be too low, and therefore, choice C is the best answer.

If Technological Progress Involves Positive Externalities,then Private Sector Spending on Research