New growth theory assumes
A)knowledge capital is subject to decreasing returns at the firm level and increasing returns over the entire economy.
B)physical capital is subject to decreasing returns at the firm level and increasing returns over the entire economy.
C)physical capital is subject to increasing returns at the firm level and decreasing returns over the entire economy.
D)knowledge capital is subject to increasing returns at the firm level and decreasing returns over the entire economy.
E)the returns to knowledge capital can be exhausted in specific industries.

Question

Quizplus · Accepted Answer

New growth theory posits that knowledge capital exhibits decreasing returns at the individual firm level but increasing returns across the economy as a whole, due to its non-rivalrous and partially non-excludable nature, allowing for widespread application and spillover effects.

New Growth Theory Assumes