Advanced Placement (AP) Human Geography Practice Exam

Which factor do footloose firms prioritize in their location decisions?

1. Access to a skilled labor force

2. Transportation costs

3. Proximity to raw materials

4. Government incentives

The correct answer is: Transportation costs

Footloose firms, which are businesses that are not tied to specific locations because they do not rely heavily on any particular input or market area, prioritize transportation costs in their location decisions. These firms can operate in various geographical locations without significant differences in their production costs, making transportation costs the crucial factor. Maintaining low transportation costs allows them to maximize profits by minimizing expenses related to moving goods and services. This flexibility enables footloose firms to choose locations based on logistical advantages, especially where they can easily access key markets or distribution networks. While access to a skilled labor force, proximity to raw materials, and government incentives are essential considerations for many other businesses, footloose firms often have the flexibility to operate in environments where these factors are favorable but not strictly necessary for their operational success. Therefore, transportation costs take precedence in their strategic location planning.