Final answer:
The relationship between factory costs and labor-hours at Fiske Corporation can be analyzed through regression. The methods of production chosen in response to labor cost changes can affect the cost structure, indicating how machinery and labor mix to achieve efficient production. A regression analysis helps the firm adjust its production methods to optimize costs and labor productivity.
Step-by-step explanation:
When analyzing the relationship between factory costs and labor-hours at Fiske Corporation, a regression would indicate how changes in labor-hours affect the total factory costs. The scenario described suggests that firms, such as Fiske Corporation, might change production methods in response to higher labor costs, opting for more physical capital and less labor, thus altering the factory cost structure. For instance, if a union negotiates higher wages, the firm may have an economic incentive to invest in more machinery, leading to different combinations of labor and capital to produce goods efficiently. Such a shift impacts productivity as well; with more capital investment, each worker's productivity could increase since they are using more or advanced equipment, but it may also result in the need for fewer employees.
In the Fiske Corporation example, if regression analysis shows a strong correlation between labor hours and factory costs, it suggests that labor is a significant factor in production costs. On the other hand, if the regression shows a weak correlation, other factors, possibly capital investment in machinery, could be more significant cost drivers. Understanding this relationship helps the firm decide on the optimal combination of labor and machinery to minimize costs and enhance labor productivity, responding strategically to wage changes demanded by unions.