1) Consider a manufacturing firm that occupies two hectares of land. The firm produces 10 tons of output per day and sells its output at a price of $80 per ton. The firm does not engage in factor substitution as the price of land changes. Intraurban transportation is on trucks, with a unit cost of $12 per ton per km. The firm's nonland cost is $200 per day. The firm exports its output via circumferential highway (beltway). a) Draw the firm's bid rent curve for land for different distances from the beltway, from a distance of zero to five km. b) Compute the bid rent per hectare at the beltway and the slope of the bid rent curve.

1) Consider a manufacturing firm that occupies two hectares of land. The firm produces 10 tons of output per day and sells its output at a price of $80 per ton. The firm does not engage in factor substitution as the price of land changes. Intraurban transportation is on trucks, with a unit cost of $12 per ton per km. The firm's nonland cost is $200 per day. The firm exports its output via circumferential highway (beltway). a) Draw the firm's bid rent curve for land for different distances from the beltway, from a distance of zero to five km. b) Compute the bid rent per hectare at the beltway and the slope of the bid rent curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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