c. Suppose the firm moves from a high-wage to a low-wage country but its level of output remains constant at 200 units per day. How will its total employment change?
15. PLEASE ONLY C
A firm can use three different production technologies, with
capital and labor requirements at each level of output as follows:
TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3
Daily
Output
K L K L K L
100 3 7 4 5 5 4
150 3 10 4 7 5 5
200 4 11 5 8 6 6
250 5 13 6 10 7 8
a. Suppose the firm is operating in a high-wage country, where
capital cost is $100 per unit per day and labor cost is $80 per
worker per day. For each level of output, which technology
is cheapest?
b. Now suppose the firm is operating in a low-wage country,
where capital cost is $100 per unit per day but labor cost is
only $40 per unit per day. For each level of output, which
technology is cheapest?
c. Suppose the firm moves from a high-wage to a low-wage
country but its level of output remains constant at 200 units
per day. How will its total employment change?
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