A US electronics firm is considering moving its production to a plant in Mexico. Its estimated production function is q = 10L 0.32 K 0.56 . In the
Question

# -A US electronics firm is considering moving its production

to a plant in Mexico. Its estimated production function is q = 10L0.32K0.56. In the US, the wage rate and the rental cost of capital are same and equal to \$15. At the Mexican plant, the firm will pay \$13.5 as wages and \$16.5 as the cost of capital.a)  What are the L and K and cost of producing q=400 units in Mexico? Show all the steps for full credit.
b)  What are the L and K and cost of producing q=400 units in the USA? Show all the steps for full credit.
c)  Draw two well-labeled graphs, one for Mexico and the other for USA to depict these equilibrium points.
d)  What would be the cost of production in Mexico if the electronics firm had to use the same factor quantities as in the US?
e)  Derive the long run cost function (C=C(q)) for the firm if it were to produce in the USA.

a. Fusce dui lectus, congue ve

itur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet.
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