LEGO Says It Will spend $1 Billion to Build New Toymaking Plant

The LEGO Group, which has six plants worldwide, will build its first U.S.-based manufacturing plant in Virginia. The 1.7-million square-foot plant, located on 340 acres, will cost $1 billion and when completed will provide 1,760 jobs.—progress-index.com

Answer the following questions to check your understanding of the story.

1) Is LEGO’s decision to build a plant in Virginia a long-run decision or a short-run decision?

LEGO’s decision to build a plant in Virginia is a ______________.

a) short-run decision because with previous plant building experience, LEGO’s new plant will be quickly operational

b) long-run decision because the firm is changing its plant

c) short-run decision because LEGO is increasing its workforce, a variable factor of production

d) long-run decision because it takes years to find the financing for a $1 billion plant

2) What are examples of LEGO’s fixed costs in its Virginia plant and what is the shape of its total fixed cost curve?

LEGO’s fixed costs include ______________. Its total fixed cost curve is ______________.

a) the cost of the plant and the cost of the land; downward sloping

b) its sunk costs; U-shaped

c) the cost of the plant and the cost of the land; horizontal

d) the wages of its 1,760 workers; horizontal

LEGO Says It Will spend $1 Billion to Build New Toymaking Plant

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