The Corporate Decision on Type and Level of R&D Activity

question 138

Multiple Choice

The corporate decision on type and level of R&D activity is difficult because

• A) the interest-rate cost of funds is difficult to estimate.
• B) much of corporate R&D is based on the pursuit of science, not on the profit motive.
• C) expected returns lie in the future and are highly uncertain.
• D) total returns and marginal returns greatly diverge.

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period.

Shifts

Refers to changes in the position of demand or supply curves in economic models, often due to changes in external factors such as technology, preferences, or policy.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase at various prices.

Price of Substitutes

The cost of alternative goods or services that consumers can purchase instead of the original item, influencing consumer choices and demand.