Do not hesitate to use concepts heard in class and or read about in your readings (There are points to be had!). If in doubt, do provide a brief definition for all terms which have been relatively new to you or whenever you want to avoid misunderstandings (Your instructor is prone to misunderstandings whenever your writing includes ambiguously applied terms)
Total footlooseness -- while impossible in the real world -- nevertheless permits interesting deductions. Our typical location models would "collapse" since transport costs no longer play a role. If we stretch the concept to exclude all other location factors, then locational analysis may become the science of randomly throwing darts at a map or of understanding entrepreneurial whim or of Freudian attempts by local or regional politicians to influence the location decision through psycho-neurotic stimuli. Location decisions are still made and one would be permitted to assume that they still have an impact on the local economy.
One more comment: It usually is a poor idea to start with an example before you have a chance to spell out in sufficient, well-structured detail what this example is an example for. Such an approach encourages you to pursue a "case study" without providing the basis for making any generalization. Thus, you tend to become "stuck" with the limitations of your example. One attractive exception to this rule which I found in one of your answers was a "preamble-type" example which served well "to get into the mood", but did not form a rigid basis for the relatively independent subsequent analysis. The problem in a 20-minute situation is, of course, that you are unlikely to have the time to spend on preambles.
Bonus Questions: