AP Services, Central Place Theory & the Informal Economy 1 — Questions and Answers
Question 1: What does the tertiary sector of the economy primarily involve?
- Manufacturing goods from raw materials
- Extracting natural resources from the earth
- Providing services to consumers and businesses (Correct answer)
- Agricultural production and farming
Correct answer: Providing services to consumers and businesses
The tertiary sector involves service provision—including retail, transportation, finance, and healthcare—rather than producing or extracting physical goods.
Question 2: Which concept, developed by Walter Christaller, explains the size and distribution of cities based on the services they provide?
- Bid-rent theory
- Central place theory (Correct answer)
- World systems theory
- Concentric zone model
Correct answer: Central place theory
Central place theory, developed by Christaller in 1933, proposes that settlements serve as central places providing goods and services to surrounding hinterlands, with larger settlements offering higher-order goods.
Question 3: In central place theory, the minimum number of customers needed to make a service economically viable is called the:
- Range
- Sphere of influence
- Threshold (Correct answer)
- Market area
Correct answer: Threshold
The threshold is the minimum market size (population) required for a business or service to be profitable and sustainable.
Question 4: The 'range' in central place theory refers to:
- The distance between two competing cities of equal size
- The maximum distance consumers will travel to obtain a service (Correct answer)
- The total number of customers a city can realistically serve
- The variety of service types offered by a settlement
Correct answer: The maximum distance consumers will travel to obtain a service
Range is the maximum distance consumers are willing to travel to obtain a particular good or service, defining the outer boundary of a market area.
Question 5: The informal economy is best described as:
- Economic activities conducted by government-owned agencies
- Economic activities that are officially registered and fully taxed
- Economic activities not regulated by the government and untaxed (Correct answer)
- Economic activities occurring exclusively in rural subsistence areas
Correct answer: Economic activities not regulated by the government and untaxed
The informal economy consists of economic transactions that occur outside government regulation, official taxation, and statistical monitoring, common in developing countries.
Question 6: Outsourcing in economic geography most accurately refers to:
- Moving manufacturing to rural areas within the same country
- Contracting work to an external organization, often in another country (Correct answer)
- The relocation of an entire company's headquarters to a foreign country
- The practice of hiring seasonal workers from neighboring regions
Correct answer: Contracting work to an external organization, often in another country
Outsourcing involves contracting specific services or production tasks to external organizations, frequently in other countries where labor costs or expertise offer advantages.
Question 7: Which term specifically describes the relocation of business processes or services to another country to take advantage of lower labor costs?
- Nearshoring
- Insourcing
- Offshoring (Correct answer)
- Reshoring
Correct answer: Offshoring
Offshoring is the relocation of business processes to another country—typically to reduce costs through lower wages, favorable tax structures, or access to specialized labor.
AP Services, Central Place Theory & the Informal Economy 1
What does the tertiary sector of the economy primarily involve?