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use math language plez and show me 2 Offshoring [50 points] Suppose Ford produces cars using components C' and Research and Development, 7, as inputs
use math language plez and show me
2 Offshoring [50 points] Suppose Ford produces cars using components C' and Research and Development, 7, as inputs and considers outsourcing some of its production. 1. Assume that Ford initially produces all inputs itsell in the United States and that its production possibilities are given in the figure below. Add isoquants to the figure and show Ford's production point in the absence of offshoring. Componenis 2. Suppose that the relative price of components was ( /1 \"};_}"1' in the U.S. in the absence of offshoring. Suppose now that Ford has the option to offshore some of its production to other countries and R&D is relatively cheaper in the rest of the world so that P\\Y _ (P:\\* (T) > () : R i In the same figure vou used in part (1), show how offshoring affects Ford's own produc- tion of components and R&D. Label those quantities with (Jp2 and (, Show that Ford will also be able to reach a higher isoquant and label the amounts of components and R&D it uses at that point with Qg5 and Qes. 3. Which input does Ford import and which one is exported? Are Ford's terms of trade o/ Pgr or Pr/ P in this case? 4. Now, suppose that China's WT'O membership results in entry of several Chinese com- panies which significantly lowers the world price of components P. In a new graph, show how this affects Ford's own production of R&D and componenis. Will Ford benefit from the lower component price? Why or why notStep by Step Solution
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