An American company that sells consumer electronics products has manufacturing facilities in Mexico, Taiwan, and Canada. The average hourly wage, output, and annual overhead cost for each site are as follows:

a. Given these figures, is the firm currently allocating its production resources optimally? If not, what should it do? (Consider output per person as a proxy for marginal product.)
b. Suppose the firm wants to consolidate all its manufacturing into one facility. Where should it locate? Explain.

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Taiwan Canada Hourly wage rate Output per person Fixed overhead cost $1.50 10 $150,000 53.00 6.00 18 20 $110,000 $90,000