Business, 24.03.2021 16:40 glowbaby123
A U. S. electronics firm is considering moving its production abroad. Its production function is
q= L^0.8K^0.2 (based on Hsieh, 1995), so its MPL= 0.8^0.2/ L^0.2 and its MPK=0.2L^0.8/ K^0.8.
In the United States, w= 8$ and r=2. In Mexico, the wage is 20% lower than in the United States but the firm faces the same cost of capital: w*= $6.40 and r*=2. What are L and K and what is the cost of producing q=100 units in both countries? In the U. S., L isnothing:
Answers: 3
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A U. S. electronics firm is considering moving its production abroad. Its production function is
q...
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