Economics: The Basics 1st Edition by Mike Mandel

Exercise 5

Suppose a consumer goods company wants to make better toothpaste that will get teeth whiter. It will have to spend money to develop and test the new product.
a) Give two examples of innovative activities which might be used to make a better toothpaste.
b) What factors will determine the company's quantity demanded of innovative activities?
c) What factors will determine the quantity of innovative activities supplied to the company? ( Hint: The company needs experts in chemistry and dental hygiene to develop the new toothpaste.)