Suppose that a firm's legal staff concludes that a new product 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

Quizplus · Accepted Answer

The new information that the product is patentable would increase the expected rate of return on R&D, which would shift the expected-rate-of-return curve to the right. As a result, the optimal amount of R&D would increase.

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