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JAMB Economics 2001 Question 28

Question 28

Industrialisation

A disadvantage of concentrating industries in an area is that it could

  1. A.lead to collusion among the firms
  2. B.result in environmental pollution
  3. C.bring about diseconomies of scale
  4. D.increase the cost of production
Show the answer and explanation

Answer: C (bring about diseconomies of scale)

Explanation

When too many firms crowd into one area they suffer external diseconomies of scale such as congestion, pollution and higher land and labour costs.