geography MCQ #10688

A local government in Sialkot wants to attract foreign investment to its surgical instruments cluster by improving urban amenities. Which urban geography concept explains why co-located firms in the same industry benefit from being in the same city?

geography MCQ #10688

  1. Question 1

    Q1. A local government in Sialkot wants to attract foreign investment to its surgical instruments cluster by improving urban amenities. Which urban geography concept explains why co-located firms in the same industry benefit from being in the same city?

    • A) Urban diseconomies of scale that reduce costs for large firms
    • B) Agglomeration economies where co-location generates shared labour pools, specialized suppliers and knowledge spillovers that benefit all firms in the cluster
    • C) Government subsidies automatically provided to all firms in designated cities
    • D) Lower crime rates in specialized industrial cities reducing security costs

    Answer: Government subsidies automatically provided to all firms in designated cities

    Explanation: Agglomeration economies explain why firms in Sialkot's surgical instrument cluster benefit from co-location: shared specialized labour pools, access to component suppliers, and knowledge spillovers between firms reduce costs and drive innovation.