Organizations that process natural or basic resources as raw materials or other essential inputs to obtain their outputs will locate near their resources if one of the following conditions holds:
A)High economies of scale exist for the product
B)The raw material can be shipped long distance before being processed
C)There is a large loss in size or weight during processing.
D)Both A and C

Question

Quizplus · Accepted Answer

If high economies of scale exist for the product or if there is a large loss in size or weight during processing, it will be cost-effective to locate near the resources as transportation costs will be significantly reduced. Therefore, both option A and C are valid reasons for organizations to locate near their resources. Option B is not a valid reason as it suggests that the raw material can be shipped long distances, which would not motivate organizations to locate near the resources.

Organizations That Process Natural or Basic Resources as Raw Materials