Suppose That General Motors Per Unit Costs for a Mexican

Multiple Choice

Suppose that General Motors per unit costs for a Mexican subsidiary are $17,000 per truck for 10,000 trucks, and $17,500 per truck for 12,000 trucks.A local Mexican firm can produce the same amounts at $16,500 and $18,000.These trucks can also be produced in Michigan and exported to Mexico at a constant cost of $18,500 per truck.If Mexican demand for trucks is 10,000 trucks, General Motor's lowest cost option is to

A) use a licensing agreement and have the Mexican firm produce the trucks.
B) use a Mexican subsidiary.
C) export the trucks to Mexico.
D) export 5,000 trucks to Mexico and use a Mexican subsidiary for the other 5,000 trucks.