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

question 133

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 8 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?

• A)MC = 8 percent; MB = 6 percent
• B)MC = 8 percent; MB = 8 percent
• C)MC = 6 percent; MB = 8 percent
• D)MC = 6 percent; MB = 6 percent

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Definitions:

Domestic Production

The output of goods and services produced within a country's borders, reflecting the overall activity of its economy.

Leading Export

Refers to the primary goods or services that a country exports the most, making a significant contribution to its economy.

Exports

Merchandise or services transferred for sale or exchange from one country to another.

Imports

Products or services that are imported into a country from overseas to be sold.