Correct Answer: The transfer of knowledge from one firm to another in the same industry

Solution : The correct answer is (a) The transfer of knowledge from one firm to another in the same industry.

The knowledge spillover effect refers to the unintentional transfer or dissemination of knowledge, ideas, or innovations from one entity to another. In the context of human capital, it specifically relates to the transfer of knowledge between firms or organizations within the same industry. When one firm develops new technologies, processes, or ideas, this knowledge can diffuse to other firms in the industry, leading to improved productivity, innovation, and overall economic growth.

Knowledge spillovers can occur through various channels, such as collaborative research and development activities, employee mobility, industry conferences, publications, and informal networks. These spillovers often benefit other firms by reducing their costs, enhancing their capabilities, and fostering a more competitive business environment.