Question on: JAMB Economics - 2018
Concentrating industries in one place is advantageous because there are gains in terms of_____________
A
cost economies
B
economies of scale
C
internal economies
D
external economies
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Correct Option: B
Concentrating industries in one place leads to several benefits, primarily related to external economies of scale. These economies arise from the growth of an industry within a specific area.
Here's why:
- External Economies: These benefits accrue to all firms within an industry due to the industry's growth. Examples include:
- Specialized labor pool: A concentration of firms attracts workers with specific skills.
- Improved infrastructure: Local government may invest in better infrastructure (roads, transport, etc.)
- Supporting industries: Suppliers and service providers locate nearby, reducing costs and improving efficiency.
- Other Options:
- A. Cost economies: This is too general, could apply to several different areas.
- **B. Economies of
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