If a firm pays all transportation costs and it is very costly to transport the inputs, but relatively inexpensive to transport the final product, the cost- minimizing location for the plant will be closer to the______ and farther away from the______ .

Question

Quizplus · Accepted Answer

If transportation costs for inputs are very high, it would be more cost-effective for the plant to be located closer to the inputs to minimize transportation costs. On the other hand, if transportation costs for the final product are relatively low, the plant can be farther from customers without incurring high transportation costs for the final product. Therefore, the cost-minimizing location for the plant would be closer to the inputs and farther away from the customers.

If a Firm Pays All Transportation Costs and It Is