Industry Clusters and Decreasing Cost Industries

… a core concept in Economic Analysis and Atlas102

Click for MRU video

Click for MRU video

Concept description

Alex Tabarrok (reference below, video on right) shows how the supply curve is derived from individual firm entry and exit decisions in an industry where, at least over some range, costs decrease as industry output increases.

How do industry clusters form?

Tabarrok provides a stylized scenario for why Dalton Georgia became “the carpet capital of the world” producing over 90 percent of U.S. carpets.

ClustersPractice questions

From http://www.mruniversity.com/node/264334, accessed 7 May 2016.

  1. As Ngoy started hiring more Cambodian refugees to work in his donut shop, this made it more likely that

Atlas topic, subject, and course

Producer Theory and Competition (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Source

Alex Tabarrok, Entry, Exit, and Supply Curves: Decreasing Costs (6-minute video), Principles of Economics – Microeconomics, Marginal Revolution University, at http://www.mruniversity.com/courses/principles-economics-microeconomics/supply-curve-decreasing-cost-industry, accessed 7 May 2016.

Page created by: Ian Clark, last modified 7 May 2016.

Image: Alex Tabarrok, minute 0.14 of Entry, Exit, and Supply Curves: Decreasing Costs (6-minute video), Principles of Economics – Microeconomics, Marginal Revolution University, at http://www.mruniversity.com/courses/principles-economics-microeconomics/supply-curve-decreasing-cost-industry, accessed 7 May 2016.