Why do physical capital and knowledge capital exhibit different types of returns?

• A. Physical capital exhibits increasing returns due to its scalability, while knowledge capital exhibits diminishing returns due to its limited applicability.
• B. Physical capital exhibits diminishing returns as additional units contribute less to output, while knowledge capital exhibits increasing returns as it benefits the entire economy.
• C. Both physical and knowledge capital exhibit diminishing returns due to resource constraints.
• D. Both physical and knowledge capital exhibit increasing returns due to technological advancements.

Answer: (B)