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

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision making and problem-solving.

Logarithms

The mathematical operation that determines the power to which a base number is raised to obtain a certain value.

Convergence

Binocular depth perception cue; the rotation of the two eyes in their sockets to focus on a single object, resulting in greater convergence for closer objects and lesser convergence if objects are distant.

GPS Location

A system that uses satellite signals to determine the precise location of a device or individual on Earth.