1. A firm can use three different production technologies, with the capital and labor requirements at each level of output as follows: Technology 1 Technology 2 Technology 3 Daily output 100 4 4 120 4 10 6. 200 11 8. б 260 б 13 10 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 $70 per worker per day. For each level of output, which technology is cheapest? b. Now suppose the firm is operating in a low-wage county, where capital cost is $100 per unit per day but labor cost is only $50 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? loo

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1. A firm can use three different production technologies, with the capital
and labor requirements at each level of output as follows:
Technology 1
Technology 2
Technology 3
Daily output
100
4
4
120
4
10
6.
200
11
8.
б
260
б
13
10
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 $70 per worker per day.
For each level of output, which technology is cheapest?
b. Now suppose the firm is operating in a low-wage county, where capital
cost is $100 per unit per day but labor cost is only $50 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?
loo
Transcribed Image Text:1. A firm can use three different production technologies, with the capital and labor requirements at each level of output as follows: Technology 1 Technology 2 Technology 3 Daily output 100 4 4 120 4 10 6. 200 11 8. б 260 б 13 10 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 $70 per worker per day. For each level of output, which technology is cheapest? b. Now suppose the firm is operating in a low-wage county, where capital cost is $100 per unit per day but labor cost is only $50 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? loo
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