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

question 127

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, leave the expected rate of return on the last dollar of R&D unchanged?

• 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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