Microeconomics: Theory and Applications with Calculus, 4e

7 Costs

People want economy and they will pay any price to get it.

—Lee Iacocca (former CEO of Chrysler)

CHALLENGE Technology Choice at Home Versus Abroad

A manager of a semiconductor manufacturing firm, who can choose from many different production technologies, must determine whether to use the same technology in its foreign plant that it uses in its domestic plant. U.S. semiconductor manufacturing firms have been moving much of their production abroad since 1961, when Fairchild Semiconductor built a plant in Hong Kong. According to the Semiconductor Industry Association, worldwide semiconductor billings from the Americas dropped from 66% in 1976, to 34% in 1998, to 17% in 2011, and then rose to 21% in early 2015.

Semiconductor firms moved ...