Firm maximizing output relative tom its labor cost

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

Chart

Number of workers. Unit of output

0 0

1 40

2. 90

3. 126

4. 150

A) is the firm maximizing output relative tom it's labor cost? Show how you know.

B) if it is not, what should firm do?

Reference no: EM13735404

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