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Distinguish between Government barrier and trade block in selecting a suitable location for [4] a manufacturing facility. 2. Audi Motors is considering three sites-A, B, and C-at which to locate a factory to build its [6] new-model automobile, the Audi SUV XL500. The goal is to locate at a minimum-cost site, where cost is measured by the annual fixed plus variable costs of production. Audi Motors has gathered the following data: Site Annualized Fixed Cost A Variable Cost per production $6,600 $5,500 $3,600 $19,000,000 $52,000,000 $75,000,000 B с The firm knows it will produce between 0 and 40,000 SUV XL500s at the new plant each year, but, thus far, that is the extent of its knowledge about production plans. a) Interpret the volume of production at which site A is optimal. b) Do you recommend site B? If yes, then explain, over what range of volume site B is optimal. If no, then explain the reason of not recommending. c) Do you recommend site C? If yes, then explain, over what range of volume site C is optimal. If no, then explain the reason of not recommending.

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