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
1. 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.
2. Suppose the firm wants to consolidate all of its manufacturing into one facility. Where should it locate in order to be productively efficient? Explain
3. In deciding to consolidate its manufacturing into one facility, what are other factors the firm needs to consider besides being productively efficient? Please list and explain your reasons.
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