Network Externalities

question 1

Multiple Choice

Network externalities

• A)may be positive.
• B)may be direct.
• C)may be indirect.
• D)all of the of the statements associated with this question are correct.

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Definitions:

Optimal R&D

The most efficient level of investment in research and development activities where marginal cost equals marginal benefit.

Expected Rate Of Return

The increase in profit a firm anticipates it will obtain by purchasing capital or engaging in research and development (R&D); expressed as a percentage of the total cost of the investment (or R&D) activity.

Interest-Rate Cost-Of-Funds

The interest expense on borrowings, reflecting the rate at which a company or individual can borrow or lend funds.

Marginal Benefit

The extra advantage gained by using an additional unit of a product or service.