Podcast
Questions and Answers
What is the primary purpose of implementing strict planning controls by governments?
What is the primary purpose of implementing strict planning controls by governments?
- To ensure businesses do not sell harmful products
- To increase competition among local businesses
- To regulate where businesses can begin trading (correct)
- To reduce the number of businesses in a city
Which of the following is NOT a reason for governments to influence business location decisions?
Which of the following is NOT a reason for governments to influence business location decisions?
- To promote business monopolies (correct)
- To avoid congestion from existing developments
- To minimize business impact on local communities
- To attract foreign manufacturers
Which financial incentive might a government offer to attract businesses?
Which financial incentive might a government offer to attract businesses?
- Increased minimum wage
- Higher rates on services
- High corporate taxes
- Tax breaks (correct)
What is the effect of trade blocs on business location decisions?
What is the effect of trade blocs on business location decisions?
How does government spending influence the economic climate?
How does government spending influence the economic climate?
What are indirect taxes primarily based on?
What are indirect taxes primarily based on?
What is one of the main fiscal policies that governments use to manage the economy?
What is one of the main fiscal policies that governments use to manage the economy?
Which of the following describes corporation tax?
Which of the following describes corporation tax?
What is one of the primary factors to consider when deciding the location for a business?
What is one of the primary factors to consider when deciding the location for a business?
Why is proximity to the market particularly important for businesses like supermarkets and hairdressers?
Why is proximity to the market particularly important for businesses like supermarkets and hairdressers?
For businesses that require high-skilled labor, where is it advisable to locate?
For businesses that require high-skilled labor, where is it advisable to locate?
Which type of business would be least affected by proximity to their market?
Which type of business would be least affected by proximity to their market?
What role does competition play in the location decision for a business?
What role does competition play in the location decision for a business?
Why is Baqala located in its specific area?
Why is Baqala located in its specific area?
How does labour proximity affect businesses in skill-specific roles?
How does labour proximity affect businesses in skill-specific roles?
In terms of operation costs, why should businesses consider the location of raw materials?
In terms of operation costs, why should businesses consider the location of raw materials?
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Study Notes
Location Decisions
- Location decisions are crucial for businesses as they significantly impact costs and revenues.
- Businesses consider various factors when selecting a location, including:
- Type of business: A retail store needs to be close to customers while online businesses can operate anywhere.
- Proximity to market: Businesses that rely on direct customer interaction need to be accessible.
- Proximity to labor: Businesses require access to skilled workers and may need to locate in areas where they are available.
- Proximity to raw materials: Businesses that utilize raw materials need to be close to their source.
Example Businesses and Location Decisions
- Baqala: A corner shop with good proximity to the market, making it easily accessible to customers.
- Zaatar w Zeit: A fast-food restaurant in a mall, benefiting from high customer traffic and proximity to competitors.
Government Influence on Location Decisions
- Governments use various strategies to influence business location decisions.
- Planning controls: Governments use permits and regulations to restrict business development in certain areas to avoid overcrowding and minimize environmental impact.
- Financial incentives: Governments may offer tax breaks, subsidies, or low-interest loans to attract businesses to specific locations, often to boost local employment.
- Trade blocs: Trade blocs promote free trade within member countries, encouraging businesses to locate within these regions to avoid trade barriers.
Government Objectives and Policies
- Governments aim to achieve various economic goals by using fiscal and monetary policies.
- Government financial objectives:
- Low unemployment: Creating jobs is a priority, as unemployment can lead to societal issues.
- Lower prices: Governments strive to keep inflation low by controlling costs and supply chains.
- Economic growth: Increasing production of goods and services is crucial for raising overall living standards.
- Fiscal policy: Government uses taxation and spending to manage the economy.
- Direct taxes: Applied to incomes, profits, and wealth (e.g. income tax).
- Indirect taxes: Applied to spending on goods and services (e.g. Value Added Tax [VAT]).
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