ABSTRACT
This chapter will focus on the important business decisions involved in the starting and expanding of a business, rather than the daily operation and management of a business, which is what the rest of the book generally deals with. Rather than involving equilibrium concepts that are the focus of so much of economics, plant location and size decisions are discrete, lumpy decisions that revolve around comparison between alternatives. That means this chapter is more about the factors that determine these decisions and the process of making them, and less about math and specific numbers. Rather, in this chapter we will explore the important aspects of these infrequent decisions and their long-term implications. We will also have one of the few discussions in the book about actual on-farm decisions as we examine how plant locations and buying prices for ingredients influence farm planting decisions, profitability, and even land prices.
