In china multinationals operating has been setting up factories deep in the interior in search of reasonable labor. For companies exporting to Europe shipping by air is too expensive. Hewlett- Packard-HP has transported four million notebook computers by rail. Shipping one container by the rail costs$10,000, one - third the price of air transit. It takes only 21 days to ship by rail, 40 days by sea. Shipping cost is factor for suppliers.
1. In your opinion will HP lower laptop prices or just increase profits?
2. Determine the price of air transit? Are marginal benefits greater than marginal cost?