In his model of endogenous technological progress based on intentional, costly R&D activity, Paul Romer assumes that:
A) it becomes easier to create new products the more products have already been created.
B) it becomes harder to create new products the more products have already been created.
C) the marginal cost of creating new products is constant over time.
D) it eventually becomes so expensive to create new products that economic growth ceases altogether.

Question

Quizplus · Accepted Answer

Romer's theory of endogenous technological progress is based on the idea that new ideas are generated through intentional, costly R&D activity. He argues that it becomes easier to create new products the more products have already been created, as there are more ideas to build upon and more opportunities for knowledge spillovers. This leads to sustained economic growth in the long run, as there is a constantly expanding set of new ideas and products to draw from.

In His Model of Endogenous Technological Progress Based on Intentional