Explain how concentration of industries in a particular region can lead to external economies
What will be an ideal response?
If the firms in a region produce similar products, there are likely to be knowledge spillovers that help keep all firms abreast of the latest technology and newest developments. Close physical proximity enhances knowledge spillovers because it creates more opportunities for information exchange through formal and informal networks of people. The presence of a large number of producers in one area helps to create a deep labor market for specialized skills. A third potential advantage to a large geographical concentration is that it can lead to a dense network of input suppliers. Manufacturers of intermediate inputs prefer to locate near the market for their products since it holds down transportation costs and may keep them better informed.
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For consumers with a binding borrowing constraint, a decrease in the real interest rate ________
A) decreases consumption now, and in the future B) increases consumption now, and in the future C) decreases consumption now, and increases future consumption D) has no impact on consumption
The main tradeoff to be considered when judging pro-growth policies is
a. foregone current consumption versus the current benefits of technological progress b. foregone current consumption versus the future benefits of technological progress c. foregone future consumption versus the future benefits of technological progress d. foregone future consumption versus the current benefits of technological progress e. government surpluses versus deficits in the future
How can the outsourcing of jobs cause production possibilities to expand?
What will be an ideal response?
In an economy, the value of inventories fell by $50 billion from year 1 to year 2. In calculating total investment for year 2, national income accountants would increase it by $50 billion.
Answer the following statement true (T) or false (F)