unit 8 Flashcards
why is one location more profitable for a factory than others ? situation factors
critical to a firm that wishes to minimize transport costs
costs associated with the established transportation networks accessible from a specific place
why is one location more profitable for a factory than others ? site factors
costs resulting from the unique characteristics of a location (labor, capital and land)
where do manufacturers try to locate factories?
as close as possible to its inputs and markets; the farther something is transported, the higher the costs
bulk-reducing industry
raw materials weigh more than the final products, so plant location is near resources to reduce transportation costs
bulk-reducing industry example
a paper mill or mining of metals like copper
bulk-gaining industry
production of a product that gains weight while being produced, so plant location is near market to reduce the costs of transportation
bulk-gaining industry example
fabrication of parts and machinery from steel and other metals
plants where beverages are bottled
single market manufacturers
specialized manufacturers with only 1 or 2 customers, best factory location is in close proximity to the customers
single market manufacturers example
producers of specialized components attached to clothing like buttons, zippers, or pins
makers of parts for motor vehicle
perishable products
products that spoil easily, companies need to be close enough to their markets so that they do not spoil or become dated during transportation
perishable products example
food products (bakers and milk bottlers)
time sensitive products (newspapers)
break of bulk point
when companies use multiple transport modes for products, it is a location where transfer among transportation modes is possible
why do firms seek the lowest cost mode of transport for products?
the cost decreases at different rates for ship, rail truck, and air; loading and unloading expenses differ by mode of transportation
break of bulk point example
seaports and airports
weber’s theory
alfred weber’s least cost theory
said the location of a plant/factory is a balance between the locations of raw materials, the labor force, and the markets
world development
describes the wealth and well being of a country as it grows and prospers
raising the living standards of the poorest countries and reducing disparities among them
poor countries are often referred to as __
third world, less developed countries, or the developing world
rich countries are often referred to as __
first world, more developed countries
GNI per capita
gross national income, measures how much is made in the country
purchasing power parity (PPP)
measures prices at different locations
based on the law of one price; if there are no transaction costs for a product, then the price for that product should be the same at every location
subjective well being
how people experience and evaluate their lives and specific domains and activities in their lives
human development index (HDI)
tells us the quality of life in a country
measure of development that includes per capita income, education level and literacy rate, and life expectancy
two views on development disparities
underdevelopment is a function of progress
underdevelopment is essential to a global economic structure that began with colonialism and persists with neocolonialism
the bottom billion
according to Collier, there is a 3 way stratification of the world’s population
the fortunate billion (affluent societies)
the majority (developing societies)
the bottom billion (stagnant economies)
