Suppose Le Jouet estimates the demand for toy trains in Russia as 45,000 toys per year.Based on the curves AVC and ATCSubsidiary, what is Le Jouet's best strategy?O Invest in a country risk analysis.Establish a subsidiary factory in Russia.License production technology to a Russian firm.Suppose that Le Jouet's fixed cost of managing foreign operations increased.Which of the following best describes how Le Jouet's decision making may change?O The decision to license instead of forming a subsidiary will occur at a lower level of output.O Licensing remains more efficient than the subsidiary at a higher level of output.O The subsidiary becomes completely inefficient at higher levels of output.The subsidiary remains more efficient than licensing at output levels of above 60,000 toy trains. PER-UNIT COST (Dollars)Jouet is a profit-maximizing firm producing toy trains-a capital-intensive good-which are sold in its home country, France, and abroad in Russia.Jouet chose foreign production as a method of penetrating the Russian market and has to decide whether it is more efficient to directly invest inussia to establish a production subsidiary or to license the technology to a Russian firm to produce its goods.n the following graph, AVCR is the average variable cost curve of a Russian firm producing toy trains. (This curve represents costs such as labornd materials.) The curve ATCsidiary represents the total unit costs Le Jouet will face if it establishes a subsidiary in Russia.ATCudaryAVCRussia1520460 75 90 105 120130 150PRODUCT (Thousands)

This question asked us to determine Le Jouet's best strategy (establish a subsidiary factory, invest…

Suppose Le Jouet estimates the demand for toy trains in Russia as 45,000 toys per year. Based on the curves AVC and ATCsubsidiary, what is Le Jouet's best strategy? O Invest in a country risk analysis. O Establish a subsidiary factory in Russia. O License production technology to a Russian firm. Suppose that Le Jouet's fixed cost of managing foreign operations increased. Which of the following best describes how Le Jouet's decision making may change? The decision to license instead of forming a subsidiary will occur at a lower level of output. Licensing remains more efficient than the subsidiary at a higher level of output. O The subsidiary becomes completely inefficient at higher levels of output. The subsidiary remains more efficient than licensing at output levels of above 60,000 toy trains.

Suppose Le Jouet estimates the demand for toy trains in Russia as 45,000 toys per year. Based on the curves AVC and ATCsubsidiary, what is Le Jouet's best strategy? O Invest in a country risk analysis. O Establish a subsidiary factory in Russia. O License production technology to a Russian firm. Suppose that Le Jouet's fixed cost of managing foreign operations increased. Which of the following best describes how Le Jouet's decision making may change? The decision to license instead of forming a subsidiary will occur at a lower level of output. Licensing remains more efficient than the subsidiary at a higher level of output. O The subsidiary becomes completely inefficient at higher levels of output. The subsidiary remains more efficient than licensing at output levels of above 60,000 toy trains.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 9E

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