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Difficulty: MediumLocation and Localization of Industries

A weight-losing raw material processing firm, such as a palm oil extraction mill in Ondo State, minimizes its total transportation costs by locating near the consumer market rather than near the raw material source.

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Answer

The statement is False. A weight-losing raw material processing firm minimizes transportation costs by locating near the raw material source, not the market.
The statement is false because weight-losing raw materials lose weight and volume during processing. To minimize total freight costs, firms siting processing facilities for weight-losing inputs must locate close to the raw material site rather than the distant consumer market.

Step-by-Step Solution

1
Analyze the input type and weight ratio of the production process.
Palm oil extraction is a weight-losing industry where raw fruit bunches lose significant weight during processing.
Understanding whether an industry is weight-losing or weight-gaining dictates its transport cost orientation.
2
Apply the principles of industrial location regarding transportation costs.
Weight-losing raw material processing firms are material-oriented to avoid high transport costs on bulky raw inputs.
Transporting concentrated finished oil to the market is far cheaper than transporting unrefined heavy fruit bunches.
3
Evaluate the statement's claim.
The statement incorrectly claims market location minimizes cost for a weight-losing firm, making it false.
Market-orientation applies to weight-gaining or fragile product industries, not weight-losing industries.

Key Concept

Factors Influencing Industrial Location: Weight-Losing Raw Material Orientation
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Topics

Location and Localization of Industries

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