Since refined sugar has a low value-to-weight ratio, even if it is shi

QUESTION

Since refined sugar has a low value-to-weight ratio, even if it is shipped halfway around the world, the transportation costs would account for a very small percentage of total costs.

Indicate whether the statement is true or false.

ANSWER

FALSE
A product’s value-to-weight ratio affects location decisions because of its influence on transportation costs. Refined sugar, certain bulk chemicals, paint, and petroleum products all have low value-to-weight ratios; they are relatively inexpensive products that weigh a lot. Accordingly, when they are shipped long distances, transportation costs account for a large percentage of total costs