According to Weber's least cost theory, products are always produced near the market because that minimizes transportation costs. 1 point

Question

According to Weber's least cost theory, products are always produced near the market because that minimizes transportation costs, true or false?

1 point

Answer 1

False

Although producing a product near the market would minimize the transportation cost, the other two factors of labor and agglomeration would play a factor as well. If labor costs are high near the market area and transportation costs are lower than the difference between labor and transportation, then products would be produced further away. A good example of this is how many of the products you use are shipped from Asia because labor costs are lower in Asia. The difference between transporting goods from Asia to the US and labor costs in Asia compared to the US make it cheaper than producing products in the states.