Suppose a Japanese company discovers a way to split its production process for televisions into two tasks: component production and assembly, and assembly can be offshored to Indonesia. Together, 0.8 units of production labor and 0.2 units of assembly labor are needed to produce 4 televisions. What is the cost in terms of swimsuits of producing 1 television with offshoring of assembly to Indonesia? How does this compare to the cost of producing 1 television with both production and assembly in Japan?
Now suppose all Japanese companies offshore assembly to Indonesia. What is the new total world production of televisions and swimsuits?
What is the new equilibrium price of televisions?