A Manufacturing Firm Is Considering Two Locations for a Plant

question 62

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: $$\begin{array} { l r l } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$$ 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:

Diagram

A simplified drawing showing the appearance, structure, or workings of something, often used in educational and technical contexts.

Water Problem

Issues related to the supply, quality, and distribution of water for consumption, agriculture, and industry, often encompassing scarcity, pollution, and management challenges.

Canada

A country located in the northern part of North America, known for its vast landscapes, multicultural diversity, and being the second-largest country by total area in the world.

Fairly Efficient

Describes a process or system that achieves its goals with a reasonable amount of resources or effort.