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You are an analyst for the firm Electronics North, a manufacturer of automotive dashboards. The firm has two plants, one in the United States and
You are an analyst for the firm Electronics North, a manufacturer of automotive dashboards. The firm has two plants, one in the United States and one in Mexico, and it cannot change the size of the plants or the amount of capital equipment. One of your duties is to analyse production at the plant as well as the industry levels. a) How would you choose to estimate a production function for a single plant? How would you choose to estimate a production function for a number of firms in an industry? In other words, what data and methodological choices would you make in each case? Explain. (Note that you do not have to gather data nor estimate a regression model)- You have gathered the data on the firm's labor productivity and obtained an estimate of the marginal product of labour in each plant. The wage in Mexico is $5. The wage in the U.S. is $20. Given current employment, the marginal product of the last worker in Mexico is 100, and the marginal product of the last worker in the U.S. is 500. b) Is the firm maximizing output relative to its labor cost? Explain your reasoning. c) If it is not, what should the firm do? NOTE: THIS IS THE SECOND TIME I SUBMITTED THIS QUISTION...THANKS
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