1. Resource allocation by local government is used to provide local public goods, internalize local externalities, manage natural monopolies so the c
Local governments play a crucial role in allocating resources to meet the needs of their communities. They allocate resources to provide local public goods, which are goods and services that benefit the entire community, such as parks, libraries, and public transportation. By providing these goods, local governments aim to enhance the overall quality of life in the community.
Local governments also allocate resources to internalize local externalities. Externalities refer to the costs or benefits imposed on third parties who are not directly involved in a transaction. Local externalities are external effects that occur within a specific geographic area. For example, if a factory pollutes a nearby river, the local government may allocate resources to mitigate the pollution's impact on the community.
In summary, resource allocation by local government is used to provide local public goods, internalize local externalities, and manage natural monopolies.
2. The disadvantage of agglomeration that is NOT a deglomeration force is excessive competition.
Agglomeration refers to the concentration of economic activity in a specific geographic area. It can lead to various benefits, such as increased productivity, knowledge spillovers, and economies of scale. However, there are also disadvantages associated with agglomeration.
Rundown housing is a deglomeration force that can arise in areas with agglomeration. As economic activity concentrates, the demand for housing increases, leading to higher prices and the deterioration of housing conditions in certain areas.
Higher taxes can also be a deglomeration force. As economic activity concentrates, local governments may raise taxes to fund infrastructure improvements and public services required by the growing population. Higher taxes can make the cost of doing business in an agglomeration area less attractive, potentially leading to the dispersion of economic activity.
Excessive competition, however, is not a deglomeration force but rather a disadvantage of agglomeration. In agglomerated areas, businesses may face intense competition due to the high concentration of firms offering similar products or services. This can result in reduced profit margins and challenges for firms to differentiate themselves.
In summary, excessive competition is not a deglomeration force, but rather a disadvantage of agglomeration.
3. Agglomeration externalities are least likely to play an important role in the farming industry.
Agglomeration externalities refer to the positive spillover effects that occur when economic activity concentrates in a specific geographic area. These externalities can include knowledge sharing, specialized labor markets, and access to supportive infrastructure and services.
While agglomeration externalities can be relevant for various industries, the farming industry is less dependent on them. Farming is a highly location-specific industry that relies on factors such as land availability, climate conditions, and access to water resources. These factors are crucial for the success of farming operations, and they are not primarily influenced by agglomeration externalities.
Internet match/dating websites can benefit from agglomeration externalities, as a higher concentration of users in a specific area can lead to a larger pool of potential matches. This concentration can enhance the effectiveness and efficiency of these platforms.
In summary, agglomeration externalities are least likely to play an important role in the farming industry compared to internet match/dating websites, auto dealers, information tech firms, and nightclubs.