The Center-Of Gravity Method of Determining a Facility Location

question 13

Multiple Choice

The center-of gravity method of determining a facility location:

• A)Requires that demand be estimated in terms of the dollar sales revenue in each market.
• B)Requires that cost be measured in dollars of transportation cost.
• C)Does not require that qualitative factors be considered in location decisions.

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is not achievable through market means, often due to market failures or intervention.

Demand Curve

A visual display that illustrates the connection between a product's price and the amount consumers want to buy over a specified time frame.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied, usually illustrating an upward slope.

Equilibrium Quantity

is the quantity of goods or services supplied and demanded at the equilibrium price, where market demand equals market supply.