Term
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Definition
| Cities are areas of high concentration of people and activity. |
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Term
| What are increasing, constant, or decreasing returns to scale? |
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Definition
Increasing: Increased efficiency of production of outputs due to a high concentration of inputs.
Considered to be the "special case."
Same thing as economies of scale.
Constant: output is not affected by concentration of inputs.
Decreasing: efficiency decreases.
Constant & decreasing considered default. |
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Term
| What are economies of scale? |
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Definition
The cost of outputs decreases with proximity of production.
Considered to be the "special case."
Same thing as increasing returns of scale. |
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Term
| Firms: what leads to increasing returns to scale? Examples? |
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Definition
| Fixed costs (i.e. hardware, start-up, customers' search) |
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Term
| Firms: what limits advantages of increasing returns to scale? |
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Definition
| Technological limits, command economy faults, demand limits |
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Term
| What is an agglomeration economy? |
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Definition
| Increased returns to scale, due to proximity. |
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Term
| Types of agglomeration economies? |
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Definition
| Localization economies, urbanization economies |
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Term
| What is a localization economy? Example? |
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Definition
| A business can operate due to the proximity of another (i.e. a high end bookstore next to a university) |
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Term
| What is an urbanization economy? Example? |
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Definition
| A business can operate due to high volume generated by urban population density [i.e. any niche business, like a fencing (sport) gear shop] |
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