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

question 21

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:

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