U.S. electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0.7K0.3 the United States, w = $7 and r=3. In Mexico, the wage is 50% lower than in the United States but the firm faces the same cost of capital: *$3.50 and r* = 3. What are L and K and what is the cost of producing q = 100 units in both countries? (for all of the following questions, enter a numeric response sing a real number rounded to two decimal places) the U.S., L is, K is, and the cost of production is $ Mexico, Lis Kis and the cost of production is $
U.S. electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0.7K0.3 the United States, w = $7 and r=3. In Mexico, the wage is 50% lower than in the United States but the firm faces the same cost of capital: *$3.50 and r* = 3. What are L and K and what is the cost of producing q = 100 units in both countries? (for all of the following questions, enter a numeric response sing a real number rounded to two decimal places) the U.S., L is, K is, and the cost of production is $ Mexico, Lis Kis and the cost of production is $
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis
Section: Chapter Questions
Problem 9TY
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning