An American company that sells consumer electronics products has manufacturing facilities in Mexico, Taiwan, and Canada
Chapter 6 Problem 5
Question 5: An American company that sells consumer electronics products has manufacturing facilities in Mexico, Taiwan, and Canada. The average hourly wage, output, and annual overhead cost for each site are as follows:
| Mexico | Taiwan | Canada | |
| Hourly wage rate | $1.50 | $3.00 | $6.00 |
| Output per person | 10 | 18 | 20 |
| Fixed overhead cost | $150,000 | $90,000 | $110,000 |
- Given these figures, is the firm currently allocating its production resources optimally? If not, what should it do? (Consider output per person as a proxy for marginal product.)
- Suppose the firm wants to consolidate all its manufacturing into one facility. Where should it locate? Explain.
Course: Managerial Economics
- 20/05/2018
- 10