B. Suppose that the Dell computer consists of a processor, a display, and assembling these components. Prod

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Offshoring B Suppose That The Dell Computer Consists Of A Processor A Display And Assembling These Components Prod 1 (118.74 KiB) Viewed 30 times

<Offshoring> B. Suppose that the Dell computer consists of a processor, a display, and assembling these components. Production is sequential – the processor and display must both be fabricated (possibly in separate locations) and sent to the assembly location before the Dell computer can be assembled. The completed computers are then shipped to Dell retail stores; for our purpose here, all computers are sold to consumers in the United States. Here are the costs per unit of performing each activity in each potential sourcing location: Activity Processor Display Assembly US $35 $35 $20 China $30 $40 $5 Taiwan *$20 $40 $10 Suppose China is not a member of the WTO, which means that Dell should pay a tariff when they import a component to China. The cost of shipping a component from Taiwan to China is $7, and the cost of shipping a component from the US to China is also $10. Dell does not need to pay trade costs in other transactions. Dell considers in which country, Taiwan or China, they can assemble components. hate the מגה-וואווי if it is assembled in Taiwem. etene the cost of mat He in una 3. try awan ort manents? 4. Now, China joined the WTO, and there is no tariff on goods imported to China. Because of that now there are no trade costs for all transactions including shipments from the US to China, and from Taiwan to China. How does Dell produce their computers now? Answer locations where each production process can be done. 5. Comparing your answers to the last two questions, comments on how international sourcing depends on trade costs when production is sequential.