In an industrial area, the location of industries is particularly influenced by?

A. extent of the division of labour
B. external economies
C. internal economies
D. nearness to financial institution

Correct Answer: Option B

B. external economies

Explanation

External economies of scale imply that as the size of industry grows larger or more clustered, the average costs of doing business within the industry fall. This may occur due to increased specialization or training of workers, faster innovation or shared supplier relationships.

Following are the types of external economies of scale

• Transportation and Communication
• Skilled Labour
• Facility of Workshop
• Helping Industry
• Research and Experiment
• Banking Facility