American Institute of Certified Planners (AICP) Practice Exam

If an industry has a location quotient of 2.00, what does this indicate?

1. It exports employment.

2. It imports employment.

3. It is experiencing unemployment.

4. It has twice as many jobs as employees.

The correct answer is: It exports employment.

A location quotient is a measure that compares the concentration of a specific industry in a region to the concentration of that industry in a larger reference area, typically the nation. When the location quotient is 2.00, it indicates that the industry is experiencing a level of employment that is twice as high as what would be expected based on the national average. This typically suggests that the region specializes in that industry and is likely exporting employment or production to other areas. In this context, a location quotient greater than 1, such as 2.00, signifies that the region has a competitive advantage in that particular industry. It means that the industry is not only attracting workers but is also functioning as a hub that produces goods or services beyond the local demand—hence, exporting employment and contributing positively to the regional economy. Other options present different scenarios that do not align with what a location quotient of 2.00 signifies. For example, the concept of importing employment would suggest that the area lacks jobs in that industry and is reliant on outside employment, which is contradictory to a high location quotient. Unemployment or a misalignment of job availability to the workforce is also unrelated to the concept of a location quotient, which focuses on industry concentrations rather than