Why would knowledge capital exhibit increasing returns for an entire economy, but not for an individual firm?
A)Its non-rival nature means small gains in productivity can be enjoyed by thousands of firms at once.
B)Its non-rival nature means that firms must compete to enjoy the benefits fo knowledge capital.
C)Its non-excludable nature means that firms have an extra incentive to produce knowledge capital.
D)Its non-excludable nature means that use by one firm does not reduce the benefit of knowledge capital to another.
E)Its non-excludable nature means that small gains in productivity cannot be captured by just one firm.

Question

Quizplus · Accepted Answer

Knowledge capital has a non-rival nature, which means that gains in productivity can be enjoyed by multiple firms at once without reducing the benefit for others. This leads to increasing returns for the entire economy as a whole, as multiple firms can benefit. However, at the individual firm level, these gains may be small and not necessarily exclusive to one firm, making it difficult for a single firm to capture significant benefits.

Why Would Knowledge Capital Exhibit Increasing Returns for an Entire