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 $15,000 in transportation costs of its windows to its customers, but causes an additional $11,500 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; less
C)should not; less
D)should; greater

Question

Quizplus · Accepted Answer

The marginal benefit of moving closer to customers is $15,000 in saved transportation costs, while the marginal cost is an additional $11,500 in input transportation costs. Since the marginal benefit ($15,000) is greater than the marginal cost ($11,500), it is profitable to move closer to the customers.

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