A region has developed a concentration of firms that manufacture musical instruments. Local colleges train workers for these jobs, and suppliers of specialist materials have set up nearby. Recently, demand for the instruments has fallen, and several manufacturers have reduced production.
Which statement best describes the likely effects of this concentration of firms on the region?
Skilled workers and nearby suppliers can lower firms' costs, but the decline can put jobs and local suppliers at risk
The fall in demand can cut manufacturing jobs, but local suppliers are unlikely to be affected as they are separate firms
The colleges can lower firms' training costs, and workers who lose their jobs should find their skills easy to use elsewhere
Skilled workers and nearby suppliers can lower firms' costs, so the region is less exposed to a fall in demand
76 exam-style questions on OCR GCSE Economics 2.1 The role of markets, covering 2.1.1 What is a market, 2.1.2 Primary, secondary and tertiary sectors, 2.1.3 Factor and product markets, and 2.1.4 Specialisation and exchange. Each one has a worked solution and a mark scheme showing where the marks go.