The economist Paul Samuelson analyzed a scenario in which R&D production suffers from foreign competition, thus lowering its price. Samuelson notes that foreign competition in R&D will generally _____ the terms of trade and national welfare if the nation exports R&D.
A) raise
B) lower
C) help
D) not affect

Question

Quizplus · Accepted Answer

According to Samuelson's analysis, foreign competition in R&D will bring down the price of R&D, which will ultimately lower the nation's terms of trade and national welfare if it exports R&D. Lower prices mean less revenue from exports, leading to a decline in welfare.

The Economist Paul Samuelson Analyzed a Scenario in Which R&D