Suppose that Flamerock Tires must decide where to produce one million tires: the US, where wages are 30 and the cost of capital is 5; or China, where wages are 5 and the cost of capital is 25. Production in each location follows the same technology (production function) given by: Q = f(L, K) = L^0.25 K^0.75 Computationally solve the cost - minimizing input levels in each location to produce the goal of 1 million tires

Suppose that Flamerock Tires must decide where to produce one million tires: the US, where wages are 30 and the cost of capital is 5; or China, where wages are 5 and the cost of capital is 25. Production in each location follows the same technology (production function) given by: Q = f(L, K) = L^0.25 K^0.75 Computationally solve the cost - minimizing input levels in each location to produce the goal of 1 million tires

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 17SQ

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