Question 28
IndustrialisationWhich of the following is an external economy derived by a firm?
- A.Low cost opportunities enjoyed by being in a place where other producers concentrate
- B.Technical economies enjoyed by varying the factors of production
- C.Economies of management by putting administrators where they are most efficient
- D.Marketing advantages attained through preferential treatment in the purchase and distribution of produce.
Show the answer and explanation
Answer: A (Low cost opportunities enjoyed by being in a place where other producers concentrate)
Explanation
External economies come from outside the firm, such as the benefits of being located near other firms in the same industry. The others are internal economies.