Investment in R&D Activities Can Allow the Firm to Maintain

question 57

Multiple Choice

Investment in R&D activities can allow the firm to maintain and strengthen its competitive position in the face of adverse exchange rate movements. The mechanism for this includes

• A)successful R&D efforts allow the firm to cut costs and enhance productivity.
• B)R&D efforts can lead to the introduction of new and unique products for which competitors offer no close substitutes-since the demand for unique products tends to be highly inelastic the firm would be less exposed to exchange risk.
• C)successful R&D efforts can create a perception among consumers that its product is indeed different from those offered by competitors. Once the firm's product acquires a unique identity, its demand is less likely to be price-sensitive.
• D)all of the above

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Definitions:

Nonprescription Drug

Medications that can be bought without a doctor's written approval, also known as over-the-counter (OTC) drugs, for common or minor health issues.

Tolerance Level

The maximum level of a particular stimulus or condition that can be tolerated before it becomes unacceptable or causes adverse effects.

Sedatives

Substances that induce sedation by reducing irritability or excitement; they often have a calming or soothing effect and may be used to induce sleep.

Cannabis

A psychoactive drug from the Cannabis plant used for medical or recreational purposes, known for its THC content.