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 (83.22 KiB) Viewed 36 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. 1. Calculate the cost of making a computer if it is assembled in Taiwan. 2. Calculate the cost of making a computer if it is assembled in China. 3. In which country, Taiwan or China, does Dell assemble components?