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 _____
A U.S. electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L^0.7K^0.3...
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,...
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)...
A firm has a Cobb-Douglas production function of Q = K^(0.25) L^(0.75) (a) Does this production technology exhibit increasing, constant, or decreasing returns to scale? (b) Suppose that the rental rate of capital is r = 1, the wage rate is w = 1, and the ?rm wants to produce Q = 3. In the long-run, what combination of L and K should they use? (It would be good to practice doing this with the Lagrangian, even if you can...
A firm has a production function of Q=20K^.2*L^.8 where Q measures output, K represents machine hours, and L measures labor hours. If the rental cost of capital (r) equals $15 the wage rate (w) equals $10, and the firm wants to produce 40,000 units of output, how much labor and capital should the firm use?
5. Suppose that your production function is q = K + L. If the firm is able to buy all the capital and labor it wants at r = $2 and w $3, what is the firm's cost function? 2q 5q 2K a. b. C. d. 3L 3L+ 2K e.
5. Suppose that your production function is q = K + L. If the firm is able to buy all the capital and labor it wants at r = $2...
1. There is a furniture manufacturer using labor (L) and capital
(K) to produce tables. Its production function is given by q=
10L^.75 K^.40. It pays a
wage of $5 per hour and rents capital at a rate of $15. The firm
wants to find the cost-minimizing bundle of inputs to produce
10,000 tables. Assume K is on the y-axis in what
follows.
Write out the firm’s cost function.
Calculate the firm’s isocost equation.
What is the slope of the...
Suppose that a firm had a production function given by: q=L^0.25*K^0.75. The wage rate (w) is $10 and the rental rate (r) is $20. Calculate the amount of labor the firm would hire when it produces 300 units of output in a cost-minimizing way
A firm’s production technology is given by the production function q = 0.25 LK where L represents labor hours, K machine hours and q the amount of output. The market wage and rental rates are, w= $16 and r = $256. The firm is operating in the long run where it can adjust both inputs. (a) Suppose that the firm currently is using ten labor hours for each machine hour. Is it minimizing its long run total cost? If so...