Explore BrainMass
Share

Production and Firm Maximizing Output

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

A firm has two plants, one in the United States and one in Mexico, and it cannot change the size of the plants or the current amount of capital equipment. The wage in Mexico is $5. The wage in the United States 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 United States is 500.

a. Is the firm maximizing output relative to its cost? Show how do you know.

b. If it is not, what should the firm do?

© BrainMass Inc. brainmass.com March 21, 2019, 2:59 pm ad1c9bdddf
https://brainmass.com/economics/production/production-and-firm-maximizing-output-138598

Solution Preview

Answer a)
Firm will be profit maximizing if the marginal product per wage is equal in both ...

Solution Summary

The solution provides calculations and brief discussion.

$2.19