Which term refers to the grouping together of many firms from the same industry in a single area for shared infrastructure and labor resources?

• A. Deglomeration
• B. Localization
• C. Agglomeration
• D. Economies of Scale

Answer: (C)

Agglomeration describes the geographic clustering of many firms in the same area to share infrastructure and access a common labor pool. When firms from the same industry locate close to one another, they benefit from a ready supply of skilled workers, specialized suppliers, and services, as well as shared facilities and infrastructure like roads, utilities, and communication networks. These shared resources reduce costs, improve coordination, and spark knowledge spillovers that boost productivity for the whole cluster. While localization is a related idea focusing specifically on concentration of one industry, the term that captures the broad phenomenon of this kind of concentration and its economic benefits is agglomeration.