Why does knowledge have increasing returns?
Since you've started by talking about trade and the division of labor, a discussion of knowledge's effects on labor productivity would be relevant. For example, why does LeBron James play basketball better if there are other good players on his team? (Example stolen from Bill Easterly's explanation of complementarity and skill matching in Elusive Quest for Growth.)

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Knowledge are exhibits increasing returns because it is cumulative and can be readily shared.
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