As industry output increases, suppose that new knowledge about production technology spreads among firms in the area through direct contacts among firms or as workers transfer from firm to firm.Which concept does this example demonstrate?
A) internal economies of scale
B) external economies of scale
C) the home market effect
D) specialization in production

Question

Quizplus · Accepted Answer

The example demonstrates external economies of scale, as new knowledge about production technology spreads among firms in the area. This is an example of how firms can benefit from each other in a specific location or industry cluster.

As Industry Output Increases, Suppose That New Knowledge About Production