According to the Endogenous Growth Theory, When a Single fiRm

question 80

Multiple Choice

According to the endogenous growth theory, when a single firm makes an investment that has positive externalities:

• A) productivity will increase across many firms in the economy.
• B) the economy will experience diminishing returns to capital.
• C) a greater proportion of economic output will be needed to renew the existing capital.
• D) the economy will reach a steady state growth rate.

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Definitions:

Raw Materials

Fundamental substances or components used in the initial stages of the manufacturing process to produce goods.

Cash Disbursements

The payment of cash by a business for expenses, purchases, or obligations.

Sales

The total amount of revenue generated from selling goods or services over a given period.

Retained Earnings

Retained earnings represent the portion of a company's net income that is kept within the company after dividends are paid to shareholders, used for reinvestment or debt payment.