An amount of R&D spending that is greater than the optimal amount indicates that the
A)marginal benefit of R&D expenditures is equal to the marginal cost.
B)marginal benefit of R&D expenditures is greater than the marginal cost.
C)interest-rate cost-of-funds is less than the expected rate of return.
D)interest-rate cost-of-funds is greater than the expected rate of return.

Question

Quizplus · Accepted Answer

When R&D spending exceeds the optimal amount, it suggests that the cost of funds (interest rate) is higher than the expected return, making additional spending inefficient.

An Amount of R&D Spending That Is Greater Than the Optimal