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Question: Please answer 3. Suppose that there is an industry that produces TVs. There are three stages of production: Product Development, Raw Materials Extraction, and

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3. Suppose that there is an industry that produces TVs. There are three stages of production: Product Development, Raw Materials Extraction, and Assembly. Suppose that the only raw material is copper. There are three countries: the UK, Slovenia, and Chile. The input costs are given by the following table: | | UK | Slovenia | Chile | Unskilled wage (per hour): \"- Skilled wage (per hour): mm\" Cost of a kilo of upper (per kilo): _\"- Furthermore, technology in the three countries is given by the following input requirements: Unit input requirements Product development Assembly Raw materials Unskilled Labor (hours) UK 1 UK 2 UK Slovenia Slovenia Slovenia Chile Chile 4 Chile Skilled Labor (hours) UK 2 UK 2 UK Slovenia 10 Slovenia Slovenia NO NO Chile 10 Chile Chile 0 UK 0 UK 0 UK 10 Slovenia Slovenia Slovenia 10 oo Copper (kilos) Chile Chile Chile 10 (a) In the table below, fill in the total cost of Product Development, Assembly, and Raw Materials in the two countries (two cells are filled in with the correct answer as a hint): (3 points) Total cost Product development Assembly Raw Materials UK Slovenia 1500 Chile 225 (b) Suppose that transportation costs are zero. Which activities will be performed in which country? (3 points) (c) Suppose that the transportation costs between Slovenia and UK are equal to 5, while the transport costs between Chile and the UK are 20. The company is interested in selling the final product in the UK market. Which actitivities are now performed in the UK? (3 points) (d) Suppose that Slovenia experiences productivity growth in the Product Development sector. Specifically, it now takes 2 hours of skilled labor instead of 10 to engage in Product Development in Slovenia. Which activities are now performed in which country? (3 points) (e) Continue to assume that the company sells the final product in the UK market. How high do the transportation costs have to be in order for the company to start sourcing copper from the UK? (3 points)

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