A US electronics firm is considering moving its production to a plant in Mexico. Its estimated...
A US electronics firm is considering moving its production to a plant in Mexico. Its estimated production function is q = 10L0.32K0.56. In the US, the wage rate and the rental cost of capital are same and equal to $15. At the Mexican plant, the firm will pay a 10% lower wage and a 10% higher cost of capital.
a) (10 points) What are the L and K and cost of producing q = 250 units in both countries?
b) (5 points) What would be the cost of production in Mexico if the electronics firm had to use the same factor quantities as in the US?
c) (10 points) Derive the long run cost function for the firm if it were to produce in the US.
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A US electronics firm is considering moving its production to a
plant in Mexico. Its estimated...
AUS electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0604 In...
AUS electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0604 In the United States, w = $6 and 4 In Mexico, the wage is 10% lower than in the United States but the firm faces the same cost of capital w = 55.40 and r = 4 What are Land K and what is the cost of producing 100 units in both countries? (for all of the following questions, enter a numeric response using a...
A U.S. electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L^0.7K^0.3...
A U.S. electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L^0.7K^0.3 In 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: w*=$3.50 and r*=3 In the U.S., L is ___, K is ___, and the cost of production is ____ In Mexico, L is ____, K is _____, and the cost of production is _____
AU.S. apparel manufacturer is considering moving its production abroad. Suppose its production function is: q=L0.60 0.40...
AU.S. apparel manufacturer is considering moving its production abroad. Suppose its production function is: q=L0.60 0.40 In the United States, w = 6 and r = 4. At its Asian plant, the firm will pay a 50% lower wage and a 50% higher cost of capital: w* = 6/1.50 and r* = 1.50 x 4. What are L and K and what is the cost of producing q = 100 units in both countries? (for all responses, enter a real...
for Asia. Find L K and cost of production AU.S. apparel manufacturer is considering moving its production abroad. Su...
for Asia. Find L K and cost of production
AU.S. apparel manufacturer is considering moving its production abroad. Suppose its production function is: q=0.80 0.20 In the United States, w=8 and 2. At its Asian plant, the firm will pay a 50% lower wage and a 50% higher cost of capital: w = 8/1.50 and r* = 1,50x2. What are L and K and what is the cost of producing 9 = 100 units in both countries? (for all responses,...
6. The production function of a firm is y = LIR. Labour is paid a wage,...
6. The production function of a firm is y = LIR. Labour is paid a wage, w = 1 and capital earns a rental rate, r = 2. (a) Derive the long-run conditional factor demands for L and K. (b) Derive the long-run cost function C(y). (c) If the firm operates in a competitive industry, p=me. Derive the long-run supply curve for the firm, y(p).
6. The production function of a firm is y = LIKt. Labour is paid a wage,...
6. The production function of a firm is y = LIKt. Labour is paid a wage, w = 1 and capital earns a rental rate, r = 2. (a) Derive the long-run conditional factor demands for L and K. (b) Derive the long-run cost function C(y). (c) If the firm operates in a competitive industry, p = mc. Derive the long-run supply curve for the firm, y(p).
2. To produce 18 units of output a firm can hire either 9 workers or 3...
2. To produce 18 units of output a firm can hire either 9 workers or 3 machines. a. Let L denote workers and K denote machines. Write down a production function that represents this firm's production technology. (2 points) b. Let w denote the wage rate and r denote the rental rate of capital. Suppose wir = 0.4. Derive the firm's long run factor demand functions for labor and capital and the firm's long run cost function. (4 points) C....
3. Suppose a firm has the production function Q = 50 KL 1) If the wage...
3. Suppose a firm has the production function Q = 50 KL 1) If the wage rate is $10 per unit of labor and the rental rate of capital is $5 per unit of capital, how much capital and labor should the firm employ in the long run to minimize the cost of producing 40,000 units? 2) Using the solution in part 1), what will the firm’s long-run total cost be?
Suppose a firm has the production function Q = 50KL with MP, = 50K and MP,...
Suppose a firm has the production function Q = 50KL with MP, = 50K and MP, = 50L . 1) If the wage rate is $10 per unit of labor and the rental rate of capital is $5 per unit of capital, how much capital and labor should the firm employ in the long run to minimize the cost of producing 40,000 units? 2) Using the solution in part 1), what will the firm's long-run total cost be?
A firm has a production function Y = 2 Ko5L05 use w to denote the wage...
A firm has a production function Y = 2 Ko5L05 use w to denote the wage rate and r to denote the capital rental price. Let us first consider the short run situation, where the firm has K = 25 and r = 2. In order to produce 10 units of output, how many units of labour does the firm need to hire? What is the average cost of the firm? a. b. Let us first consider the short run...
AUS electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0604 In the United States, w = $6 and 4 In Mexico, the wage is 10% lower than in the United States but the firm faces the same cost of capital w = 55.40 and r = 4 What are Land K and what is the cost of producing 100 units in both countries? (for all of the following questions, enter a numeric response using a...
AU.S. apparel manufacturer is considering moving its production abroad. Suppose its production function is: q=L0.60 0.40 In the United States, w = 6 and r = 4. At its Asian plant, the firm will pay a 50% lower wage and a 50% higher cost of capital: w* = 6/1.50 and r* = 1.50 x 4. What are L and K and what is the cost of producing q = 100 units in both countries? (for all responses, enter a real...
for Asia. Find L K and cost of production
AU.S. apparel manufacturer is considering moving its production abroad. Suppose its production function is: q=0.80 0.20 In the United States, w=8 and 2. At its Asian plant, the firm will pay a 50% lower wage and a 50% higher cost of capital: w = 8/1.50 and r* = 1,50x2. What are L and K and what is the cost of producing 9 = 100 units in both countries? (for all responses,...
6. The production function of a firm is y = LIR. Labour is paid a wage, w = 1 and capital earns a rental rate, r = 2. (a) Derive the long-run conditional factor demands for L and K. (b) Derive the long-run cost function C(y). (c) If the firm operates in a competitive industry, p=me. Derive the long-run supply curve for the firm, y(p).
6. The production function of a firm is y = LIKt. Labour is paid a wage, w = 1 and capital earns a rental rate, r = 2. (a) Derive the long-run conditional factor demands for L and K. (b) Derive the long-run cost function C(y). (c) If the firm operates in a competitive industry, p = mc. Derive the long-run supply curve for the firm, y(p).
2. To produce 18 units of output a firm can hire either 9 workers or 3 machines. a. Let L denote workers and K denote machines. Write down a production function that represents this firm's production technology. (2 points) b. Let w denote the wage rate and r denote the rental rate of capital. Suppose wir = 0.4. Derive the firm's long run factor demand functions for labor and capital and the firm's long run cost function. (4 points) C....
Suppose a firm has the production function Q = 50KL with MP, = 50K and MP, = 50L . 1) If the wage rate is $10 per unit of labor and the rental rate of capital is $5 per unit of capital, how much capital and labor should the firm employ in the long run to minimize the cost of producing 40,000 units? 2) Using the solution in part 1), what will the firm's long-run total cost be?
A firm has a production function Y = 2 Ko5L05 use w to denote the wage rate and r to denote the capital rental price. Let us first consider the short run situation, where the firm has K = 25 and r = 2. In order to produce 10 units of output, how many units of labour does the firm need to hire? What is the average cost of the firm? a. b. Let us first consider the short run...
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