International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz

Exercise 1

For each of the following examples, explain whether it is a case of external or internal economies of scale:
a. A number of firms doing contract research for the drug industry are concentrated in southeastern South Carolina.
b. All Hondas produced in the United States come from plants in Ohio, Indiana, or Alabama
c. All airframes for Airbus, Europe's only producer of large aircraft, are assembled in Toulouse, France.
d. Cranbury, New Jersey, is the artificial flavor capital of the United States.