For the drop down menu question the options are 1)would not Which of the followi
ID: 1161423 • Letter: F
Question
For the drop down menu question the options are 1)would not Which of the following is true about general knowledge? O It does not generate any externalities. O It generates a positive externality. O It generates both a positive and a negative externality. It generates a negative externality. As a result, private firms undertake the efficient amount of basic scientific research. Which of the following policies has the United States adopted in response to this problem? Check all that apply A progressive income tax Subsidizing research through the National Institutes of Health O Taxing revenue from the National Science Foundation It is often argued that this policy increases the technological capability of American producers relative to that of foreign firms True or False: This argument is correct only if the knowledge provided by basic research is not excludable. True O FalseExplanation / Answer
• General knowledge is non excludable and non rival in consumption. Therefore, it's a public good that creates a positive externality, because the benefits of basic scientific research and general knowledge is available to many people.
Answer- option B
• Private firms would not undertake the efficient amount of basic scientific research.
• To solve the externality problem U.S subsidies research through the national institute of health. Subsidy is given because its a problem of positive externality.
Answer- option B
• The statement is False, because The argument that this policy increases the technological capability of American producers relative to that of foreign firms, is true only if the knowledge provided by basic research is excludable.