When the cost of shipping raw materials is higher than the cost of of shipping the final product,firms tend to locate near the raw materials.

Question

Quizplus · Accepted Answer

This is because it would be more cost-effective for firms to transport the finished goods less distance than transporting the raw materials over a longer distance, which can increase the transportation costs significantly. By locating near the raw materials, firms can reduce transportation costs and improve their profitability.

When the Cost of Shipping Raw Materials Is Higher Than