The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds is 8 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?
A)MC = 8 percent; MB = 6 percent
B)MC = 8 percent; MB = 8 percent
C)MC = 6 percent; MB = 8 percent
D)MC = 6 percent; MB = 6 percent

Question

The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds is 8 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?
A)MC = 8 percent; MB = 6 percent 
B)MC = 8 percent; MB = 8 percent 
C)MC = 6 percent; MB = 8 percent 
D)MC = 6 percent; MB = 6 percent

Quizplus · Accepted Answer

The Answer of  The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds is 8 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?
A)MC = 8 percent; MB = 6 percent 
B)MC = 8 percent; MB = 8 percent 
C)MC = 6 percent; MB = 8 percent 
D)MC = 6 percent; MB = 6 percent

The Table Shows the Rate of Return and R&D Spending