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.
You might also like to view...
In the case of a linear demand function, the marginal revenue function is twice as steep as the demand function
Indicate whether the statement is true or false
The wage gap between high school and college graduates can be explained, other things the same, by ________
A) a greater increase in the demand for high school educated labor than college-educated labor B) a greater increase in the supply of college-educated labor than high school educated labor C) a greater increase in the demand for high school educated labor than in the supply of high school educated labor D) a greater increase in the demand for college-educated labor than high school educated labor
The price of a ride on the Washington, D.C. metro depends on the time of day you ride. This is an example of
A. exploitation. B. inefficiency. C. political interference with a market. D. pricing to spread out demand.
A valid argument against redistributing income to achieve complete equality is that: a. income equality would destroy the social cohesiveness that exists among different income groupings
b. this would eliminate the monetary incentives to work and produce. c. the cost of obtaining the equality would be so deflationary as to promote economic instability. d. income equality would imply class segregation based on factors such as sex or race, since income would be constant.