Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show your work A U.S. electronics firm is considering moving its production abroad. Its production function is q= L0.6K.4 (based on Hsieh, 1995), so

Please show your work

image text in transcribed
A U.S. electronics firm is considering moving its production abroad. Its production function is q= L0.6K.4 (based on Hsieh, 1995), so its MPL = 0.6K0.4 / 10.4 and its MPK = 0.41 0.6 / K0.6 In the United States, w =$6 and r=4. In Mexico, the wage is 30% lower than in the United States but the firm faces the same cost of capital: w* = $4.20 and * = 4. What are L and K and what is the cost of producing q = 100 units in both countries? (for all of the following questions, enter a numeric response using a real number rounded to two decimal places) In the U.S., L is

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

Business Intelligence

Authors: Jerzy Surma

1st Edition

1606491857, 9781606491850

More Books

Students also viewed these Economics questions

Question

What type of account (classification) is Accumulated Depreciation?

Answered: 1 week ago

Question

5. Give examples of binary thinking.

Answered: 1 week ago