International Production: You have two factories that produce identical products (let's say plastic forks). The plants and equipment are fully depreciated and there are no fixed costs. Note, this is a competitive market.As a result, your cost basis in the USA is TCusa = 80Yusa^2, your cost basis in CHINA isTCchina = 48Ychina^2. The demand for plastic forks is Y=1488.Note: The production then becomes Y = Yusa + Ychina = 1488a. With no restrictions (competitive markets exist) how many plastic forks will the USA produce?b. How much would China need to lower their cost to produce all of the 1488 plastic forks?c. How much of a subsidy would the firm need to produce all 1488 plastic forks in the USA, given the original TC functions? Homework #5International Production: You have two factories that produce identical products (let's say plasticforks). The plants and equipment are fully depreciated and there are no fixed costs. Note, thisis a competitive market.As a result, your cost basis in the USA is TCusa = 80Yusa^2, your cost basis in CHINA isTCchina 48Ychina^2. The demand for plastic forks is Y=1488.Note: The production then becomes Y = Yusa + Ychina = 1488a. With no restrictions (competitive markets exist) how many plastic forks will the USA produce?b. How much would China need to lower their cost to produce all of the 1488 plastic forks?c. How much of a subsidy would the firm need to produce all 1488 plastic forks in the USA,given the original TC functions?

To address the questions about the production of plastic forks in a competitive market with no fixed…

Answered: Homework #5 International Production:…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 5MC

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International Production: You have two factories that produce identical products (let's say plastic forks). The plants and equipment are fully depreciated and there are no fixed costs. Note, this is a competitive market. As a result, your cost basis in the USA is TCusa = 80Yusa^2, your cost basis in CHINA is TCchina = 48Ychina^2. The demand for plastic forks is Y=1488. Note: The production then becomes Y = Yusa + Ychina = 1488 a. With no restrictions (competitive markets exist) how many plastic forks will the USA produce? b. How much would China need to lower their cost to produce all of the 1488 plastic forks? c. How much of a subsidy would the firm need to produce all 1488 plastic forks in the USA, given the original TC functions?