As head of the planning commission of eastern motors

Reference no: EM13875503

1As head of the planning commission of Eastern Motors, your job is to determine where to locate a new plant. The only inputs used in your cars are steel and labor and the production function is s^0.5L^0.5 Cobb-Douglas where f (S, L) ? S L , where S is tons of steel and L is units of labor. You can locate your plant either in country A or country B. In country A, steel costs $7 (U.S.) a ton and labor costs $7 (U.S.) per unit. In country B, steel costs $8 (U.S.) per ton and labor costs $6 (U.S.) per unit.

(a) what will be the optimal combination of S and L used in the production of cars in Indonesia?

(b) what will be the optimal combination of S and L used in the production of cars in Vietnam?

Reference no: EM13875503

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