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Problem 3. Toyota U S operations reports the following yearly data from three assemny plants: Plant Vehicles Employment Plant size (sq. ft.) A 220315 2239

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Problem 3. Toyota U S operations reports the following yearly data from three assemny plants: Plant Vehicles Employment Plant size (sq. ft.) A 220315 2239 4,800,000 B 107300 2073 4,000,000 0 111264 1445 2,000,000 Suppose that Toyota's technology is adequately described by the CobbDouglas production function Q = aLch; and capital K can be measured by plant size. (3.1) Use the data above to estimate .51, 11,11. Hint: natural logarithms will help. (3.2) Does Toyota face decreasing, constant or increasing returns to scale? (3.3) Suppose Toyota moves 100 workers from the largest plant to the smallest. How will total vehicle production change? (3.4) Suppose Toyota closes the smallest sized plant, and, in a deal with the U MN, moves all the workers to the other plants. Assume Toyota wants to produce as many cars as possible given employment and plants. How many workers should Toyota move to each plant? How 1will total production of cars change

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