As it relates to R&D,a firm's expected-rate-of-return-curve,r:
A) slopes downward because the firm arrays,highest to lowest,the rates of return on R&D activities.
B) slopes upward because of the law of diminishing returns.
C) is a horizontal line.
D) depends on whether it borrows from the bank or used retained earnings in financing R&D.

Question

Quizplus · Accepted Answer

The expected-rate-of-return-curve for R&D activities slopes downward because firms prioritize their R&D investments based on the expected rate of return, starting with the highest and moving to the lowest. This prioritization reflects the diminishing marginal returns of additional R&D investments.

As It Relates to R&D,a Firm's Expected-Rate-Of-Return-Curve,r