This question is about dynamic inefficiency. (a) What is dynamic inefficiency? (15%) (b) Do the empirical studies support dynamic inefficiency? This question is about research and development. (a) Why does the intermediate firm which discovers the new design obtain the monopoly power in producing this intermediate good? (b) How do we solve for the research and development firm's profit? (c) What have we learned from the class of research and development models about the determinants(s) of the economic growth? 3. This question compares vertical research and development to horizontal one. (a) What are the differences between vertical and horizontal research and development? (b) What are the similarities between vertical and horizontal research and development? 4.Why should we lean economic growth models