A Manufacturing Firm Is Considering Two Locations for a Plant

question 16

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: $$\begin{array} { l c c } \text { Location } & \text { FC (annual) } & \text { VC (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$$
What would be the total annual costs at the point of indifference?

• A) $300,000
• B) $240,000
• C) $380,000
• D) $220,000
• E) $760,000

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Definitions:

Indirect Quotation

A report on what someone has said without quoting their exact words, often used in writing and speech.

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