Which of the following is a likely reason that a company would move its facility from one location to another?

• A. To increase the number of factors of production available globally
• B. To eliminate the need for capital in its operations
• C. To avoid producing any goods or services
• D. To reduce production costs by accessing cheaper labor or resources

Answer: (D)

Verified step by step guidance

1. Understand the concept of factors of production, which include land, labor, capital, and entrepreneurship, and how their availability and cost affect a company's location decisions.
2. Recognize that companies often relocate facilities to reduce production costs, which can be achieved by accessing cheaper labor, raw materials, or other resources in a different location.
3. Analyze why eliminating the need for capital or avoiding production is not practical or relevant reasons for relocating a facility, as companies need capital and must produce goods or services to operate.
4. Focus on the economic incentive behind relocation: minimizing costs to increase profitability, which is a fundamental principle in microeconomics related to firm behavior and cost minimization.
5. Conclude that the most likely reason for moving a facility is to reduce production costs by accessing cheaper labor or resources, aligning with the firm's goal to optimize production efficiency.