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Lola617 Lola617
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5 years ago
A U.S. firm currently produces 200 units of output according to the production function q = L0.5K0.5 and faces input prices equal to wU.S. = rU.S = $11. Should the U.S. firm move their company abroad where they will face input prices equal to wabroad = $6.50 and rabroad = $15.00?
A) Yes, because the total costs will fall from $3,859 to $2,810.
B) No, because the total costs will increase from $2,810 to $3,859.
C) No, because the firm has decreasing returns to scale.
D) Not enough information is given to answer this problem.
Textbook 
Microeconomics

Microeconomics


Edition: 8th
Author:
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brady_ferguson6brady_ferguson6
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Anonymous
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10 months ago
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