Which of the following is NOT a reason for the absence of an industry in the rural areas?
- Absence of financial institution
- restricted market
- inadequate power and water supply
- inadequate transportation
-
presence of external economies
The correct answer is: E
Explanation
External economies of scale are business-enhancing factors that happen outside a company but within the same industry. It has to do with the availability of skilled labor, banking facilities, transportation, communication, etc within a company.
Option E is the correct option because rural areas lack most of the things that make up a company's external economies of scale.