Concentrating a firm's manufacturing facilities in an optimal location and serving the world market from that single location makes sense when trade barriers are low.

Question

Quizplus · Accepted Answer

When trade barriers are low, it is easier for firms to export goods and services from a single location. This helps to reduce costs associated with setting up multiple production facilities and also allows the firm to benefit from economies of scale. However, if trade barriers are high, it may be necessary for firms to set up production facilities in multiple locations in order to capture local markets and avoid trade restrictions.

Concentrating a Firm's Manufacturing Facilities in an Optimal Location and Serving