Is knowledge capital subject to the law of diminishing returns? Explain
What will be an ideal response?
The law of diminishing returns states that successive increases in capital result in successively smaller and smaller increases in output. Knowledge capital may not be subject to the same law of diminishing returns that physical capital is. In fact, knowledge capital may experience increasing returns because knowledge, once discovered, is available to everyone and is therefore more likely to generate new technologies and economic growth.
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During the Great Recession of 2007-2009, the investment demand curve shifted:
A. Left because of very low interest rates B. Right because of very low interest rates C. Left because of declines in expected returns D. Right because of reductions in tax rates
Standard Oil was broken into smaller businesses by the courts because
A. its owner agreed with the judge to lower prices. B. its products were harmful. C. it was too profitable. D. it dominated every aspect of the oil and gasoline business.