Question: 1 Ole Kirk Kristiansen invented “Lego” in 1949. Since then, Lego has produced over 200 billion bricks. “Lego” bricks are made from acrylonite butaside styrene. The raw material is melted at around 235 degrees Celsius, molded under high pressure, and then cooled. In 2005, Lego out sourced production of “duplo” bricks to Flextronics, a contract manufacturer with a plant in Hungry. Then in 2006, Lego sold its factory at Klando, Czech Republic, used to manufacture “Lego” bricks, to Flextronics. Lego would produce only the more complicated products including Technic and Bionicles in Billund, Denmark.

(A) Compare the equipment and labor costs of producing “Duplo” and “Lego” bricks in the Czech Republic and Hungary vis-a’-vis Denmark, where wages are relatively higher.

(B) Be selling its Kladno factory to Flextronics, how would Lego affect its fixed relative to variable costs of production.