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    The Gizmo Company is planning to develop new household gadgets. shows the company’s demand for financial capital for research and development of these gadgets, based on expected rates of return from sales. Now, say that every investment would have an additional 5% social benefit—that is, an investment that pays at least a 6% return to the Gizmo Company will pay at least an 11% return for society as a whole; an investment that pays at least 7% for the Gizmo Company will pay at least 12% for society as a whole, and so on. Answer the questions that follow based on this information.

    If the going interest rate is 9%, how much will Gizmo invest in R & D if it receives only the private benefits of this investment?Assume that the interest rate is still 9%. How much will the firm invest if it also receives the social benefits of its investment? (Add an additional 5% return on all levels of investment.)

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Questions & Answers

division of labour
Abdulmumeen Reply
explain Qd=601/3p
mahmud Reply
what is unemployment
Ernest Reply
what is the formula for average revenues
EMMANUEL Reply
please 7 implications of Lionel Robbins definition of economics
Amaka Reply
Problem of economics to the society
Gmzaeeyan Reply
Within 1 or 2 percentage points, what has the U.S. inflation rate been during the last 20 years? Draw a graph to show the data.
Daphne Reply
law of demand is explaining why the demand curve is downward sloping
Tan Reply
the graph would be x axis is quantity and y axis is price, as the price is expensive, there would be less demand therefore less quantity anf vice versa, thats why demand curve is downward sloping
Tan
and*
Tan
problems of economic to the society
onalaja Reply
Income Price Taste of the commodity
Ubani Reply
what are the basic economic concept
charls Reply
state any two factors which might influence the spending patterns of consumers
Nelao Reply
in a graphical way suppose the total demand for rice and total supply of rice per month
precious Reply
it helps government, individual to allocate their scare resources
Amure Reply
if the demand for one commodity excludes another, it is sad to be
Amure
what is this Means of economics
Abubakar Reply

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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