An Instructional Exercise in Cost-Raising Strategies and Perfect Complements Production

Publication: Journal of Economic Education

Volume: Volume 38, No. 2

Issue: Spring 2007

Pages: 215-221

Author(s): Dennis L. Weisman

Address:

Dennis L. Weisman

Professor

Department of Economics

Kansas State University

Manhattan, KS 66506-4001

Phone: (785) 532-4588

Fax: (785) 539-7225

Internet Address: weisman@ksu.edu

Title: An Instructional Exercise in Cost-Raising Strategies and Perfect Complements Production

Abstract: An account of the contract negotiations between United Auto Workers (UAW) and Ford Motor Company is presented to assist students in developing facility with perfect complements production/cost functions and cost-raising strategies.  Specifically, this discussion suggests that the UAW targeted Ford because it was more likely to go along with a liberal wage and benefits package given its investment in robotics.