The expected-rate-of-return curve for R&D expenditures of a firm slopes downward because of
A)diminishing marginal returns from R&D activities.
B)economies of scale in R&D projects.
C)average fixed costs of R&D projects.
D)the law of supply for R&D expenditures.

Question

Quizplus · Accepted Answer

Diminishing marginal returns from R&D activities explain why the expected-rate-of-return curve for R&D expenditures slopes downward. As more is invested in R&D, each additional dollar tends to yield less in terms of new discoveries or improvements, reflecting the principle of diminishing marginal returns.

The Expected-Rate-Of-Return Curve for R&D Expenditures of a Firm Slopes