Module 2 discussion
Production and Cost
Using some of the concepts you learned from the module,
discuss the questions below.
In an effort to stop the migration of many of the automobile
manufacturing facilities from the Detroit area, Detroit’s City Council is
considering passing a statute that would give investment tax credits to
automobile manufacturers. This would reduce auto manufacturer’s costs of using
capital and high tech equipment in their production processes.
As a local union representative you voice your opposition to
the statute. Outline the basis of your arguments as a union representative
(Hint: consider the impact that the investment tax credit would have on the
capital/labor ratio as a result of the increase in the price of capital/price
of labor ratio).
As a representative for one of the automakers, how would you
counter the arguments of the union representative?
