Friday, September 12, 2014

Manufacturing Costs By Top Exporters

In my Industry Analysis and Managerial Economics course I talk about how a firm can minimize its total costs when producing a two or more different plants.  This can also be used when looking at two (or more) different countries.  The key is not to look at average costs, but at marginal costs between the two manufacturing plants or countries and produce such that the firm is equalizing the marginal costs between the different production facilities.

The Economist has a nice article showing the manufacturing costs adjusted for labor productivity are more similar that many would assume.  While these are average costs, they are indicative that marginal costs of manufacturing are also more similar than at first glance.

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