Answer Happy

In the United States, the semiconductor manufacturer illustrated in the figure to the right produces using a wafer-handling stepper on isocost line C¹. At its plant abroad, the wage is lower, so it faces a flatter isocost curve. If the wage is only slightly lower, so that its cost is C², it produces the same way as at home. However, if the wage is much lower, so that the isocost is C³, it switches to a stepper technology. In the figure, show that there is a wage and a cost of capital services such that the firm is indifferent between using the wafer - handling stepper technology and the stepper technology. Using the line drawing tool, draw an isocost line where the wage and cost of capital are such that the firm is indifferent between using the wafer - handling stepper technology and the stepper technology. Attach the label 'C4.. Carefully follow the instructions above, and only draw the required object. How does this wage/cost of capital ratio compare to those in the C² and C³ isocosts? In absolute value, the wage-cost of capital ratio on C4 is less than this ratio on c² and greater than this ratio on C³. C K, Units of capital per day 10- 9- 8- 2- 1- 0- 0 1 200 ten-layer chips per day isoquant Wafer-handling stepper Stepper & Aligner " 4 5 6 7 8 L, Workers per day 2 3 -00 -O 9 10 Ly