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You need to expand production, either in the US or in China. Currently, your average American workers produce 100 units per hour and Chinese workers produce only 16 units per hour. But your American workers will cost you $20 per hour and your Chinese workers cost you $3 per hour. a.Graph as much this information as possible as isocost and isoquant information. b.Where should you expand production? c.Looking ahead into the near future, you forecast that your American workers will cost you $25 per hour, but demand for labor in China will drive up costs per worker there to $5 per hour. How does this alter the isocost and isoquant graph? d.Given these forecasts, where should you expand production?
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