Please zoom in to see question thank you

5. Foreign direct investment versus licensing Le 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. Le louet chose foreign production as a method of penetrating the Russian market and has to decide whether it is more efficient to directly invest in Russia to establish a production subsidiary or to license the technology to a Russian firm to produce its goods. On the following graph, AVC Rama is the average variable cost curve of a Russian firm producing toy trains. (This curve represents costs such as labor and materials.) The curve ATCSubsidiary represents the total unit costs Le louet will face if it establishes a subsidiary in Russia. Suppose Le Jouet estimates the demand for toy trains in Russia as 75,000 toys per year. Based on the curves AV puri, and ATOsubsidiary. what is Le louet's best strategy? All subsidiary O Reassess the market potential in Russia. O License production technology to a Russian firm. AVC O Establish a subsidiary factory in Russia. m In PER-UNIT COST (Dollars) Suppose that Le Jouet found a way to acquire capital at a lower cost than that paid by the Russian firm. 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 The decision to form a subsidiary instead of licensing will occur at a lower level of output. O The decision to license instead of forming a subsidiary will occur at a higher level of output. 15 30 45 60 75 90 105 120 135 150 PRODUCT (Thousands) O The subsidiary becomes completely inefficient at a lower level of output