In New Theories of "Endogenous Growth", Increasing Marginal Returns to Investment

question 67

Multiple Choice

In new theories of "endogenous growth", increasing marginal returns to investment can occur because

• A)early investors create an infrastructure favorable to followers.
• B)many investments require large fixed costs, the benefits of which are not available to subsequent firms.
• C)little risk is associated with the process of innovation for technological followers
• D)investment costs for followers can be higher than for pioneers.
• E)knowledge provides the input that allows investment to be profitable.

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Definitions:

Cross-Price Elasticity

A measure of how much the quantity demanded of one good responds to a change in the price of another good.

Hot Dogs And Mustard

A classic food pairing where the mustard serves as a condiment for the hot dogs, enhancing flavor.

Price-Inelastic

A description of a good or service whose demanded quantity does not significantly change when its price changes, indicating low sensitivity to price.

Textbook Purchases

The act of buying books required for academic study, often specified by educational institutions.