Assignment Three: One of the most powerful concept about knowledge economy is the law of increasing returns. Discuss what this concept means to a company or any organization. Use examples to illustrate your points.

Law of increasing returns is very important to businesses due to the fact of “the more you sell, the more you sell.” An example of this would be social networking sites such as Facebook and Twitter. If one person is only using the site it doesn’t do much good for the owner of the business or for the customer; but if more people happen to be using the sites, the more beneficial it is for everyone involved.

Compact Disks are another example of increasing returns. It takes a lot of money and resources to create and make all of the information that goes on that one particular disk, but after that one disk is created, virtually making copies of the other disks cost practically nothing or very little compared to the original price of that fist disk. What is important to remember is not to put too much time in money into one product though if you cannot make it up through the sales. It is important to know the competition’s product and know what the competition is selling their product for.