How does the availability of market area near the industry help to reduce the cost of production?
Answers
Answer: Raw material, transporting cost, buying cost, and time to reach the point of production can be saved , hence reducing the production cost.
Explanation:
The significance of raw materials in manufacturing industry is so fundamental that it needs no emphasising. Indeed, the location of industrial enterprises is sometimes determined simply by location of the raw materials. Modem industry is so complex that a wide range of raw materials is necessary for its growth.
Further we should bear in mind that finished product of one industry may well be the raw material of another. For example, pig iron, produced by smelting industry, serves as the raw material for steel making industry. Industries which use heavy and bulky raw materials in their primary stage in large quantities are usually located near the supply of the raw materials.
It is true in the case of raw materials which lose weight in the process of manufacture or which cannot bear high transport cost or cannot be transported over long distances because of their perishable nature. This has been recognised since 1909 when Alfred Weber published his theory of location of industry.