Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

International Production You have two factories that produce identical products (lets say plastic forks). The plants and equipment are fully depreciated and there are no

International Production

You have two factories that produce identical products (lets say plastic forks). The plants and equipment are fully depreciated and there are no fixed costs. Note, this is a competitive market. As a result, your cost basis in the USA is TCusa = 16Yusa2 your cost basis in CHINA is TCchina = 2Ychina2 The demand for plastic forks is Y=72 Note, the production then becomes Y = Yusa + Ychina = 72 a. With no restrictions (competitive markets exist) how many plastic forks will the USA produce?

b. How much would China need to lower their cost to produce all of the 72 plastic forks?

c. How much of a subsidy would the firm need to produce all 72 plastic forks in the USA, given the original TC functions?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How Social Forces Impact The Economy

Authors: Steven Pressman

1st Edition

1000062899, 9781000062892

More Books

Students also viewed these Economics questions

Question

What is the typical class size?

Answered: 1 week ago

Question

2. How do I perform this role?

Answered: 1 week ago