Concept:External economies are benefits a firm enjoys due to the growth or concentration of the whole industry in a particular location.
Explanation:These benefits come from outside the firm but within the industry.
Examples include shared infrastructure, access to skilled labour, and specialised suppliers.
By locating in an area where the industry is already established, a firm can reduce its unit costs and increase output.
Increasing advertising or workforce are internal decisions, not external benefits.
Merging with another firm leads to internal economies of scale, not external economies.
Thus, the best way for a firm to benefit from external economies is to locate in an established industrial area.
Answer:C. Locating in an area in which the industry is already established