Article 1: How will scientific research output respond to a policy-induced increase in its demand? Today's knowledge-based globalized economies rely heavily on scientific research output to ensure continuing high productivity growth. Seeking to promote growth in their domestic economies, governments around the world subsidize scientific research in many different ways. One way to increase scientific research would be to implement policies designed to increase demand for scientific research - for example, by paying a subsidy to purchasers. Such an increase in demand would be expected to lead to an increase in quantity supplied of scientific research and its market price. But how successful would such a policy be? Would the price rise caused by an increase in demand be associated with a relatively large or relatively small increase in scientific research output? In other words, is the elasticity supply of scientific research high or low? Some clues to the answer to this question can be found in the estimate, contained in a US study, that a 100 percent increase in the number of research scientists would give little more than a 50 percent increase in research output. Further increases in the number of scientists would increase output by an even smaller proportion. The fundamental argument is that the best research scientists are already in the industry - any increase in the number of scientists would involve employment of researchers with lower skills than those already employed. Using the above clues and assuming that the wage rate paid to all research scientists is the same, answer the following questions: i. If, as the demand for scientific research output increases, the companies and institutes undertaking this research respond to this increase in demand by employing more researchers, is the supply of research output likely to be elastic or inelastic? Explain 2marks _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ii. As output increases further, does supply elasticity become smaller or larger? 1mark ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ iii. Is the elasticity of supply of scientific research output likely to increase over a six month period? Over a 10-year period? Explain 2marks ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________