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

Multiple Choice

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

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