Mexico Taiwan Canada
Hourly wage rate $1.50 $3.00 $6.00
Output per person 10 18 20
Fixed overhead cost $1,50,000 $90,000 $1,10,000

1. Given these figures, is the firm currently allocating its production resources optimally? If not, what should it do and why? Show all your calculations.

2. Suppose the firm wants to consolidate all its manufacturing into one facility. Where should it locate? 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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