The marginal benefit to a firm from its R&D expenditures is depicted by its
A) interest-rate cost-of-funds curve.
B) expected-rate-of-return curve.
C) venture capital acquisition curve.
D) retained earnings payout curve.

Question

Quizplus · Accepted Answer

The expected-rate-of-return curve represents the expected benefits (or returns) that a firm anticipates from its R&D expenditures. As the firm invests more in R&D, the marginal benefit (or expected rate of return) typically decreases due to diminishing returns. Therefore, the expected-rate-of-return curve is a useful tool for evaluating how much a firm should invest in R&D to achieve maximum benefit.

The Marginal Benefit to a Firm from Its R&D Expenditures