Some economists argue that private firms will not undertake the efficient amount of basic scientific research.
a. Explain why this might be so. In your answer, classify basic research in one of the categories shown in Figure.

b. What sort of policy has the United States adopted in response to this problem?
c. It is often argued that this policy increases the technological capability of American producers relative to that of foreign firms. Is this argument consistent with your classification of basic research in part (a)?

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Rival in consumption? Figure No Private Goods Club Goods Four Types of Goods Goods can be grouped into four categories according to two characteristics: (1) A good is excludable if people can be prevented from using it. (2) A good is rival in consumption if one person's use of the good diminishes other people's use of it. This diagram gives examples of goods in each category Fire protection -Cable TV · Ice-ơeam cones . Congested tol roads .Uncongested tol roads Excludable? Common Resources Public Goods ● Fish in the ocean Tornado siren No The erironment . Congested nontoll roads -National defense Uncongested nontoll roads