Final answer:
Research and development (R&D) can create positive externalities, benefiting society as a whole. Without intervention, there may be too little investment in R&D. The correct option is A) does; little.
Step-by-step explanation:
Research and development (R&D) can create positive externalities. When companies invest in R&D, they develop new technologies that are broadly available for other firms to use. These technologies can lead to economic growth and innovation, benefiting society as a whole. However, without intervention, there may be too little investment in R&D.
For example, let's say a pharmaceutical company invests in R&D to develop a new drug. This drug not only benefits the company by generating profits but also provides health benefits to patients who use it. These health benefits are positive externalities and are not fully captured by the company in terms of profits. As a result, the private benefits for the company are less than the overall social benefits.
In the given question, the correct option is A) does; little. Research and development does create external benefits, and without intervention, there might be too little investment in R&D.