The United States has developed a comparative advantage in film production due to the film industry being long-established in southern California, and lower costs result from the size of the industry in the area.This source of comparative advantage is referred to as
A)the abundance of natural resources.
B)superior process technology.
C)external economies.
D)best practices of unskilled labor.

Question

Quizplus · Accepted Answer

External economies refer to benefits that businesses receive from being located in close proximity to other businesses in the same industry or supply chain. In this case, the film industry in southern California has developed external economies resulting in lower costs due to access to specialized equipment, skilled labor, and support services. This has given the US a comparative advantage in film production. The other choices do not accurately describe the source of comparative advantage in this case.

The United States Has Developed a Comparative Advantage in Film