3.5 A firm can use three different production technologies, with capital and labor requirements at each level of output as follows:

a. Suppose the firm is operating in a high-wage country, where capital cost is $150 per unit per day and labor cost is $100 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 $150 per unit per day but labor cost is only $60 per unit per day. For each level of output, which technology is cheapest?

c. Suppose the firm moves from a low-wage to a high-wage country but its level of output remains constant at 100 units per day. How will its total employment change?

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Technology 1 Technology 2 Technology 2 Technology 3 Daily Output K L K L K L 100 6 8 150 200 250 4557 9 6 12 15 2356 10 14 6 18 10 5249 7 35 8 8 12