Assume That a Firm's Interest-Rate Cost-Of-Funds Curve for R&D Is

question 120

Multiple Choice

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic. Which of the following would increase a firm's optimal R&D expenditures and, in equilibrium, reduce the expected rate of return on the last dollar of R&D?

• A)a rightward shift of the expected-rate-of-return curve
• B)an upward shift of the interest-rate cost-of-funds curve
• C)a leftward shift of the expected-rate-of-return curve
• D)a downward shift of the interest-rate cost-of-funds curve

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Definitions:

Short-Term Pricing

The strategy or approach to setting prices for goods or services with a focus on immediate or near-future objectives.

Absorption Costing

An accounting method that includes all manufacturing costs, both direct and indirect, in the cost of a product, thereby fully absorbing overhead.

Profit

The financial gain achieved when the revenue from sales or services exceeds the costs and expenses incurred in providing those sales or services.

Budgeted Fixed Overhead

The estimated amount of fixed costs that a business plans to incur over a certain period, usually for budgetary and planning purposes.