National Park Mystery Photo 55: Americana

The spatial margin of profitability model introduced by German economist Alfred Weber in the early 1900s set the stage for modern industrial location theory. It is especially applicable to industries that use heavy materials (relatively low value in relation to bulk or weight) and have substantial transport costs. The spatial margin of profitability identifies potentially profitable locations, one of which is optimal, existing at the intersection of the cost curve (depicting the variation of cost with respect to location or distance from a reference point) and the revenue curve (which holds costs constant and shows the variation of revenue with respect to location). Locations outside the margins are unprofitable.