Advanced Placement (AP) Human Geography Practice Exam

Which factor is not a key consideration in the least-cost theory of industrial location?

1. Labor costs

2. Environmental impact

3. Transportation costs

4. Agglomeration economies

The correct answer is: Environmental impact

In the context of least-cost theory of industrial location, the focus is primarily on minimizing the costs associated with production. The key factors identified in this theory include labor costs, transportation costs, and agglomeration economies. Labor costs are crucial because industries often seek locations with affordable labor to reduce overall production costs. Transportation costs are equally significant, as industries must consider the expenses involved in moving raw materials to manufacturing sites and finished products to markets. Agglomeration economies refer to the benefits that companies experience by being close to one another, such as shared services, infrastructure, and a pool of specialized labor, which can also help reduce costs. While environmental impact is an important consideration in today's industrial planning and location decisions, it is not a primary factor in the original formulation of least-cost theory. This theory was developed with a focus on economic factors directly affecting production costs, rather than on broader environmental concerns. Therefore, environmental impact is the factor that does not align with the core tenets of least-cost theory.