passwella.
Menu

WAEC Economics 1988 Question 34

Question 34

Theory of Production

External economies occur when

  1. A.industries are scattered all around
  2. B.a firm decides to expand
  3. C.industries are producing below capacity
  4. D.firms comprising an industry are concentrated in one area
  5. E.a firm is located near raw materials.
Show the answer and explanation

Answer: D (firms comprising an industry are concentrated in one area)

Explanation

External economies are benefits a firm gets from the growth of the whole industry, especially when firms are localised together (shared skilled labour, services, roads).