Consider a R&D; project that is known to reduce production cost. The cost of und
ID: 1124677 • Letter: C
Question
Consider a R&D; project that is known to reduce production cost. The cost of undertaking the project is K. Prior to undertaking the project, cost per unit of output is c = 4. After the innovation, cost per unit is b = 0 . The market inverse demand function is Ply) = 12-y. (a) Is this innovation drastic or non-drastic? (b) Compute the social value of the project (v (c) Compute the value of the project to the innovating firm in a competitive market where other firms produce at marginal cost c = 4 (vc).Explanation / Answer
Breakthrough projects involve creating entirely new products by using new technology. There is high risk taking in this category.
Derivatives project involve additions, improvements, changes to existing products. The changes could be incremental or minor changes.
Platform projects involve major changes in existing products and services with significant improvement in quality, features, cost. These are oriented towards new platform for growth in future.
R&D projects involve inventing new technologies, materials for use in commercial development. This is costly, high risk but will give high returns.
Construction projects involve organized effort to construct a building or structure. They incorporate numerous mini-projects. A construction project is not a single activity but has multiple complex activities.
16. Correct option is c.
Platform projects focus on next generation products and services for the company. They involve growth strategies for the company. They may lead to R&D projects or derivatives project.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.