A U.S. synthetic rubber manufacturer is considering moving its production to a Japanese plant. Its production function is: q=L0.50 0.50 (based on Flath, 2011). In the United States, w=$10=r. At its Japanese plant, the firm will pay a 30% lower wage and a 30% higher cost of capital: w* =$7.69 and r* = 13.00. What are L and K and what is the cost of producing q=100 units in both countries? (for all responses, enter a real number rounded to two decimal places) In the U.S., Lis
A U.S. synthetic rubber manufacturer is considering moving its production to a Japanese plant. Its production function is: q=L0.50 0.50 (based on Flath, 2011). In the United States, w=$10=r. At its Japanese plant, the firm will pay a 30% lower wage and a 30% higher cost of capital: w* =$7.69 and r* = 13.00. What are L and K and what is the cost of producing q=100 units in both countries? (for all responses, enter a real number rounded to two decimal places) In the U.S., Lis
Managerial Economics: A Problem Solving Approach
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Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
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Transcribed Image Text:A U.S. synthetic rubber manufacturer is considering moving its production to a Japanese plant. Its production
function is:
q=L0.50 0.50 (based on Flath, 2011).
In the United States, w=$10=r. At its Japanese plant, the firm will pay a 30% lower wage and a 30% higher
cost of capital: w* =$7.69 and r* = 13.00.
What are L and K and what is the cost of producing q=100 units in both countries? (for all responses, enter a
real number rounded to two decimal places)
In the U.S., L is
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VIEWStep 3: Determine cost minimization input bundle:
VIEWStep 4: Detrmine the cost function:
VIEWStep 5: Determine value of L and K and cost in US
VIEWStep 6: Determine value of L and K and cost in Japanese:
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