The Expected-Rate-Of-Return Curve for R&D Expenditures of a Firm Slopes

question 76

Multiple Choice

The expected-rate-of-return curve for R&D expenditures of a firm slopes downward because of

• A) diminishing marginal returns from R&D activities.
• B) economies of scale in R&D projects.
• C) average fixed costs of R&D projects.
• D) the law of supply for R&D expenditures.

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Definitions:

Law of Averages

A layman's term often misused to suggest that a future event is likely to occur to balance out a statistical deviation, though not a formal statistical principle.

Independent Events

Two or more events whose outcomes do not affect each other's probabilities of occurring.

Positive Difference

The result of subtracting a smaller number from a larger number, ensuring a non-negative result.

Fair 6-Sided Dice

A classic dice with six faces, each showing a number from one to six, where each number has an equal likelihood of appearing on a roll.