View Your World, a high- end window manufacturer, directly pays all of the transaction costs. The managers of View Your World are considering the profit- maximizing location for their plant. If locating the plant closer to its customers saves $10,000 in transportation costs of its windows to its customers, but causes an additional $7,500 in input transportation costs, View Your World______ locate its plant closer to its customers as the marginal benefit is______ than the marginal cost.
A)should not; more
B)should; greater
C)should not; less
D)should; less

Question

Quizplus · Accepted Answer

The marginal benefit of saving $10,000 in transportation costs to customers is greater than the marginal cost of an additional $7,500 in input transportation costs, making it profitable to locate the plant closer to the customers.

View Your World, a High- End Window Manufacturer, Directly Pays