The optimal amount of R&D for a firm depends on the following, except
A) marginal cost of funds for R&D projects.
B) marginal benefit of R&D projects.
C) expected profitability of R&D projects.
D) amount of funds the firm currently has for R&D projects.

Question

Quizplus · Accepted Answer

The amount of funds the firm currently has for R&D projects is not a determining factor in the optimal amount of R&D. It is important to consider the marginal cost and benefit of R&D projects, as well as the expected profitability, to determine the optimal level of investment in R&D.

The Optimal Amount of R&D for a Firm Depends on the Following