A Manufacturing Firm Is Considering Two Locations for a Plant

question 29

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

If annual demand is estimated to be 20,000 units, which location should the company select?

• A)Atlanta
• B)Phoenix
• C)either Atlanta or Phoenix
• D)reject both Atlanta and Phoenix
• E)build at both locations

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Definitions:

Comparative Advantage

The ability of an individual or country to produce a good or service at a lower opportunity cost than another producer, supporting international trade.

Automobiles

Self-propelled vehicles designed primarily for passenger transportation.

Coffee

A beverage made from roasted and ground coffee beans, widely consumed globally and known for its stimulating effect due to caffeine.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others, allowing for beneficial trade.