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Steel industry is highly competitive globally. A typical firm in the steel manufacturing industry in Pittsburgh,...

Steel industry is highly competitive globally. A typical firm in the steel manufacturing industry in Pittsburgh, "Super Steel" in 1980s has the following production function... y= K2L. Their production plan or contract is to deliver 8192 tons of steel per day. The capital price is $32 per day and the labor price is $62 per day. How many labor would they need to hire in the 1980s? What is the cost to produce 8192 tons for SuperSteel?

In 2000s there are lots of international trade about steel. Suppose there's another steel manufacturing firm in china, "SinoSteel," that produces the exact same products as super steel. They can also produce 8192 tons per day with the production function y= KL2. The capital price in china is $32 per day, and the labor price is $16 per day. So, how many labor would SinoSteel hire? What is the cost to produce 8192 tons for SinoSteel?

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Rahul Sunny answered 2 months ago
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