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Exam (elaborations)

CH 13 REVIEW QUESTIONS WITH CORRECT ANSWERS 2025

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CH 13 REVIEW QUESTIONS WITH CORRECT ANSWERS 2025

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Business Finance
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Business finance








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Institution
Business finance
Course
Business finance

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Uploaded on
November 11, 2024
Number of pages
2
Written in
2024/2025
Type
Exam (elaborations)
Contains
Questions & answers

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  • ch 13 review questions with correct answers 2025

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CH 13 REVIEW QUESTIONS WITH
CORRECT ANSWERS 2025
InWwhatWwayWdoWCompanyWinvestmentsWinWresearchWandWdevelopmentWcreateWpositiveWexternalities?W-
WcorrectWanswer-

NewWtechnologies,WonceWdiscovered,WcanWbeWusedWbyWotherWfirmsWwhoWdidWnotWpayWtheWcostWofWdevel
opment



WellWtheWdemandWforWborrowingWandWinvestingWinWR&DWbeWhigherWorWlowerWifWthereWareWnoWexternalW
benefits?W-WcorrectWanswer-
IfWtheWexternalWbenefitsWcouldWbeWinternalize,WtheWdemandWwouldWbeWhigher.WHowever,WifWtheWpositive
WexternalityWsimplyWdisappeared,WdemandWshouldWbeWunchanged,WsinceWfirmsWonlyWcareWaboutWprivateW

benefits



WhyWamWIWaWprivateWmarketsWtendWtoWprovideWtooWfewWincentivesWforWtheWdevelopmentWofWnewWtechn
ology?W-WcorrectWanswer-
SinceWprivateWinvestorsWdoWnotWreapWtheWsocialWbenefitsWofWtheirWinvestments,WtheyWmayWinvestWatWaWr
ateWbelowWtheWsociallyWoptimalWlevel



WhatWcanWgovernmentWdoWtoWencourageWtheWdevelopmentWofWnewWtechnology?W-WcorrectWanswer-
GovernmentWcanWtryWtoWinternalizeWsomeWofWtheWexternalitiesWthroughWpatentWandWtradeWsecretWlaws



WhatWareWtheWtwoWkeyWcharacteristicsWofWpublicWgoodsW-WcorrectWanswer-
PublicWgoodsWareWnonWrivalWandWnonexcludable



NameWtwoWpublicWgoodsWandWexplainWwhyWtheyWareWpublicWgoodsW-WcorrectWanswer-
AWfireworksWdisplayWisWaWpublicWgood,WbecauseWoneWpersonWisWenjoymentWofWitWdoesWnotWexcludeWothe
rsWfromWenjoyingWit,WandWitWisWdifficultWtoWpreventWsomeoneWfromWseeingWit.WRadioWbroadcastWcouldWals
oWbeWconsideredWaWpublicWgood,WisWanyoneWwithWtheWreceiverWcanWlistenWtoWthemWinWoneWpersonsWcons
umptionWdoesWnotWdiminishWthatWofWothers



WhatWisWtheWfreeWriderWproblem?W-WcorrectWanswer-
TheWfreeWriderWproblemWisWwhenWpeopleWrefuseWtoWpayWforWaWpublicWgood?WBecauseWtheyWcannotWbeWe
xcludedWfromWitsWuse.WIfWmanyWpeopleWbehaveWinWthisWwayWtheWgoodWmightWnotWbeWproducedWinWtheWfi
rstWplace
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