Question

A possible externality associated with the process of accumulating new capital is that: A. a reduction in labor productivity may occur. B. new production processes may be devised. C. old capital may be made more productive. D. the government may need to adopt an industrial policy.

Answer 1

Answer:

B. new production processes may be devised.

Explanation:

This means, the new capital in touch with the human innovation traits will generated ways to use this capital beyond their inventors knowledge. Giving the capital additional used. Assthis uses were discovered after the capital invention, are not included in the cost of the new capital therefore, are positive externalities of their.

Also, generally the labor productivity increases with new capital not decrease.