A Manufacturing Firm Is Considering Two Locations for a Plant

question 12

Multiple Choice

A manufacturing firm is considering two locations for a plant to produce a new product.The two locations have fixed and variable costs as follows: At what annual output would the company be indifferent between the two locations?

• A)60,000 units
• B)15,000 units
• C)10,000 units
• D)20,000 units
• E)4,000 units

Comprehend the concept of diminishing marginal returns and its effect on cost curves.

Grasp the factors leading to shifts or movements along the cost curves in the short run.

Recognize the significance of fixed, variable, and marginal costs in determining profit-maximizing output levels.

Interpret graphs and tables to determine cost relationships and cost behavior in a firm.

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Definitions:

Interaction Effects

Occur when the effect of one independent variable on a dependent variable changes depending on the level of another independent variable.

Main Effects

The direct, independent impacts of individual independent variables on a dependent variable in the context of factorial designs.

Total Mean

The overall average of a set of numbers or measurements, calculated by summing all the values and dividing by the number of observations.

Total Mean

The overall average of a set of numerical values computed by summing them up and dividing by the count of numbers.