RM1

1. Weber’s Least Cost Theory Market RM1 RM2 When a company is building a plant, they must take into consideration the location of raw materials and the market for the product.

2. Weber’s Least Cost Theory Market • Weber made certain assumptions regarding location. 3. The area in the triangle has similar cultural and economic values. • The topography is uniform RM1 RM2 4. Labor is infinitely available at any production point in the triangle. 2. Transportation costs are the same throughout the triangle.

3. Weber’s Least Cost Theory Market A weight gaining industry is one in which the finished product weighs more than the inputs. Bottling plant Inputs are sugar, syrup, bottles, caps RM1 RM2 If you have a weight gaining industry, it will make sense to have your factory location closer to your market in order to minimize freight costs.

4. Weber’s Least Cost Theory Market A weight reducing industry is one in which the finished product weighs less than the inputs. Steel, aluminum, copper Heavy ore is needed to produce steel or aluminum. RM1 RM2 If you have a weight reducing industry, it will make sense to have your factory location closer to your market in order to minimize freight costs.

5. Weber’s Least Cost Theory Market If two inputs are not similar, this will affect the location of production. “Brick bunny” Built of bricks and feathers, RM1 RM2 When a company is building a plant, they must take into consideration the location of raw materials and the market for the product.

6. Weber’s Least Cost Theory When a company is building a plant, they must take into consideration the location of raw materials and the market for the product. Market RM1 RM2 Another critical location is labor. This is the most expensive cost, however, is transportation which is the easiest to control.

7. Weber’s Least Cost Theory When a company is building a plant, they must take into consideration government taxing policies. Market RM1 RM2 Substitution principle