Final answer:
Site specificity is the specialized investment where production facilities are located near each other, often the result of comparative advantages such as geography, skills, or available capital. The correct option is B. site specificity
Step-by-step explanation:
The type of specialized investment where the buyer and seller of an input locate their production facilities close to each other is referred to as site specificity. This concept is a part of transaction cost economics and describes situations where investments are made in a specific location to reduce transport costs, minimize logistical issues, or capitalize on local resources. These site-specific investments often occur because of comparative advantage, where parties focus on producing goods or services that they can generate more effectively based on factors like skill sets, education, geography, or available capital. For instance, it is easier and more efficient to be a wheat farmer in North Dakota than in Florida, considering the local geographical and climate conditions that favor wheat production.
The correct option is B. site specificity