The cost of innovation curve (CoI) in the Schumpeterian R&D model will shift up (to the left) when:
A) more resources are devoted to innovative activities.
B) the total supply of productive factors and resources increases.
C) the average number of resources needed to produce an innovation rises.
D) profit from innovation increases.

Question

Quizplus · Accepted Answer

The cost of innovation curve in the Schumpeterian R&D model represents the average cost of producing an innovation. It shows the relationship between the cost of innovation and the number of innovations produced. The curve will shift up (to the left) when the average number of resources needed to produce an innovation rises. This means that each innovation will require more resources, which will increase the cost of innovation. As a result, the curve will shift up. Therefore, the correct answer is C.

The Cost of Innovation Curve (CoI) in the Schumpeterian R&D