capital and labor requirements at each level of output as follows: TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3 Daily Output K K L. K L 100 3 7 4 5 5 4 150 3 10 4 5 5 200 4 11 8. 6 250 5 13 6 10 7 8 a. Suppose the firm is operating in a high-wage country, where capital cost is $100 per unit per day and labor cost is $80 per worker per day. For each level of output, which technology is cheapest? b. Now suppose the firm is operating in a low-wage country, where capital cost is $100 per unit per day but labor cost is only $40 per unit per day. For each level of output, which technology is cheapest? c. Suppose the firm moves from a high-wage to a low-wage country but its level of output remains constant at 200 units per day. How will its total employment change?

capital and labor requirements at each level of output as follows: TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3 Daily Output K K L. K L 100 3 7 4 5 5 4 150 3 10 4 5 5 200 4 11 8. 6 250 5 13 6 10 7 8 a. Suppose the firm is operating in a high-wage country, where capital cost is $100 per unit per day and labor cost is $80 per worker per day. For each level of output, which technology is cheapest? b. Now suppose the firm is operating in a low-wage country, where capital cost is $100 per unit per day but labor cost is only $40 per unit per day. For each level of output, which technology is cheapest? c. Suppose the firm moves from a high-wage to a low-wage country but its level of output remains constant at 200 units per day. How will its total employment change?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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Question

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15. A firm can use three different production technologies, with
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Daily
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a. Suppose the firm is operating in a high-wage country, where
capital cost is $100 per unit per day and labor cost is $80 per
worker per day. For each level of output, which technology
is cheapest?
b. Now suppose the firm is operating in a low-wage country,
where capital cost is $100 per unit per day but labor cost is
only $40 per unit per day. For each level of output, which
technology is cheapest?
c. Suppose the firm moves from a high-wage to a low-wage
country but its level of output remains constant at 200 units
per day. How will its total employment change?
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