An apparel manufacturer is considering moving its production abroad. Its production function is q=In its domestic market, w=7 and r=3. At its plant abroad, the firm will pay a 50% lower wage and a 50% higher cost of capital, so w=7*0.5=3.5 and r=3*1.5=4.5

a) When it produces 100 units of output, so q=100, how many units of L and K does it want to hire in its domestic plant ? What is the cost of producing in its domestic plant ? What if it produces 100 units in its plant abroad ?

b) What would be the cost of production in its plant abroad if the firm had to use the same factor quantities as in its domestic plant?