The fixed and variable costs for three potential manufacturing plant sites for a rattan chair weaver are shown:
|
SITE
|
FIXED COST PER YEAR
|
VARIABLE COST PER UNIT
|
|
1
|
$500
|
$11
|
|
2
|
1,000
|
7
|
|
3
|
1,700
|
4
|
a) Over what range of production is each location optimal?
b) For a production of 200 units, which site is best?