The Table Shows the Rate of Return and R&D Spending

question 150

Multiple Choice

The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds is 9 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?

• A)MC = 5 percent; MB = 9 percent
• B)MC = 9 percent; MB = 9 percent
• C)MC = 9 percent; MB = 13 percent
• D)MC = 5 percent; MB = 5 percent

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Definitions:

Decreases

Reductions or declines in numbers, size, strength, or another measurable factor.

Frequency

The rate at which a repeating event occurs over a specified time period.

Extinction Procedure

A method used in behavior psychology to reduce or eliminate the occurrence of a conditioned response by discontinuing reinforcement.

Reinforcer

An element used in behavioral psychology to encourage the repetition of a desired behavior by providing a consequence that the individual finds rewarding.