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

question 2

Multiple Choice

Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic.Which of the following would decrease a firm's optimal R&D expenditures and,in equilibrium,increase 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:

Illusory Promise

An agreement that lacks a true commitment from the promisor, making it unenforceable as a contract.

Accord

An agreement between parties to settle a dispute or obligation.

Satisfaction

The fulfilment of a requirement, payment of a debt, or resolution of a claim.

Illusory

This refers to something that appears to be real or possible but actually lacks substance, reality, or is deceptive in nature.