Question

Describe how the existence of a large labor pool leads to agglomeration economies?

Answer 1

Economies of agglomeration are cost savings arising from urban agglomeration.one aspect of agglomeration is that firm's are often located near to each other.as more firms in related fields of business cluster together,their costs of production may decline significantly.even when competing firms in the same sector cluster ,there may be advantage because the cluster attracts more supplier and customer than a single firm could achieve alone.

The basic concept of agglomeration economies is that production is facilitated when there is a clustering of Economics activity.The existence of agglomeration economies is central to the explanation of how cities Increases in size and population which place the phenomena on a larger scale.