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

question 43

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:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are accessible to all members of society and one person's use does not reduce availability to others.

Indivisible

A characteristic of goods or factors that cannot be divided or separated into smaller units without losing value or utility.

Public Good

A product or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Price Mechanism

The process through which prices rise and fall as a result of changes in supply and demand, guiding economic decisions and resource allocation.