Suppose a firm expects that a $40 million expenditure on R&D in the current year will result in a new product that can be sold nextyear. Selling that product next year will increase the firm's revenue next year by $60 million and its costs next year by $54 million.Instructions: Enter your answer as a whole number.a. What is the expected rate of return on this R&D expenditure?percent A firm faces the following costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials$8 per raw-material unit. Initially, the firm can produce 2,000 units of output by combining its fixed capital with 200 units of labor and500 units of raw materials. After the firm improves its production process, it can produce 3,000 units of output by combining its fixedcapital with 100 units of labor and 500 units of raw materials.%DHow will the firm's total costs change as a result of the improved production process?Instructions: Enter your answers as a whole number.Total cost changes from $ 12000using the original process to $ 2000O using the improved process.

Increase in net revenues = $60 - $54 = $6

Suppose a firm expects that a $40 million expenditure on R&D in the current year will result in a new product that can be sold next year. Selling that product next year will increase the firm's revenue next year by $60 million and its costs next year by $54 million. Instructions: Enter your answer as a whole number. a. What is the expected rate of return on this R&D expenditure? percent

Suppose a firm expects that a $40 million expenditure on R&D in the current year will result in a new product that can be sold next year. Selling that product next year will increase the firm's revenue next year by $60 million and its costs next year by $54 million. Instructions: Enter your answer as a whole number. a. What is the expected rate of return on this R&D expenditure? percent

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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