Question

Which of the following statements is true of agglomeration? Agglomeration creates a demand that forces a skilled labor force to move out of a region. Ownership advantages stem from agglomeration. Agglomeration advantages stem from knowledge spillover from one firm to another. Agglomeration deprives a firm from enjoying ownership advantages.

Answer 1

Answer:

The correct answer is letter "C": Agglomeration advantages stem from knowledge spillover from one firm to another.

Explanation:

In Business, Agglomeration refers to the cluster of companies in one common physical area. Agglomeration is divided into two categories: urbanization economies and localization economies. Urbanization economies refer to businesses sharing the same physical area even if they are dedicated to providing different goods or services.

Localization economies, instead, refers to firms of the same industry being located in a common location. In such a scenario, companies can take advantage of the same pool of labor and the quick spread of ideas among entities or the knowledge spillover.