A car manufacturing company wants to decide where to locate a new plant. The only inputs used in cars are steel and labour, and the production function is , where is tons of steel and is units of labour. The company can locate its plant either in country or in country . In country , steel costs Rs 70 a ton and labour costs Rs 70 per unit. In country , steel costs Rs 80 per ton and labour costs Rs 60 per unit. In which of the two countries should the company locate its new plant?
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