5. There are two industries in a circular city. Each industry produces a good forexport and the export point is the center of the city. The price at the point ofexport is $15 per unit for the first good and $15 per unit for the second good.Transportation costs within the city are 50 cents per mile per unit for the firstgood, and 75 cents per mile per unit for the second good. Other costs (labor andcapital) are $8 per unit for the first good and $6 per unit for the second good.Firms produce 60 units of the first good and 80 units of the second good per unitof land. The land market is perfectly competitive, which implies that the users ofland bid enough to reduce their economic profits to zero. The agricultural bidrent is $30 at all locations.a. Find the bid rent curves for the two industries that correspond to zeroeconomic profits.b. Where do the first and second industries locate in the city? Show on a graph.

Given, Rent is defined as a surplus which results from advantages such as capitalization. It…

Answered: There are two industries in a circular…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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