Canvas XCO 20 17:19 Time Remaining < Submit ☆ Multiple Choice 2.5 points Competing companies often locate near each other, often because of a critical mass of information, talent, venture capital, or natural resources. Which of the following is NOT an example of clustering? Banks distancing at least 5 miles apart from each other. Fast food restaurants locating near interstate exits. Car dealerships locating near each other. Oil refineries locating in Louisiana near the Gulf of Mexico. Previous Submit VETI —
The Correct Answer and Explanation is:
The correct answer is: Banks distancing at least 5 miles apart from each other.
Explanation:
Clustering in economics refers to the geographic concentration of businesses or industries that benefit from being close to each other. This concept often arises when companies need to share resources, knowledge, or services. Clustering can result from various factors, such as the availability of skilled labor, access to suppliers, lower transportation costs, or a shared customer base. Now, let’s break down the options:
Fast food restaurants locating near interstate exits: This is an example of clustering. Fast food chains often cluster near high-traffic areas, such as interstate exits, because of the large number of potential customers. They benefit from being in close proximity to one another as it creates a critical mass of consumers, making it easier to attract passing travelers.
Car dealerships locating near each other: This is also an example of clustering. Car dealerships often locate close to each other to create a “car buying district” where customers can compare different brands and models in one area. This shared location draws in more customers, benefiting all the dealerships.
Oil refineries locating in Louisiana near the Gulf of Mexico: This is another classic example of clustering, often driven by the availability of natural resources. The Gulf of Mexico is rich in oil reserves, and refineries are located nearby to minimize transportation costs and maximize operational efficiency.
Banks distancing at least 5 miles apart from each other: This is not an example of clustering. Banks tend to locate strategically in areas with enough demand for their services, but they usually do not cluster like other industries. In fact, many banks purposely distance themselves from competitors in order to capture a specific customer base in a particular area. This distancing would be contrary to the concept of clustering, where businesses try to benefit from proximity to competitors.
In conclusion, clustering is about businesses being near each other to share resources, customers, or knowledge, and the option about banks distancing themselves does not fit this concept.
