Assignment:
The Webster Widget Works produces widgets out of two raw materials, wids and gets. It obtains wids from Widding Springs and gets gets from Gettysburg. Its final product is sold in the metropolis of Silo. There is a railroad system (The Widding Springs, Gettysburg and Silo Line) connecting these places as indicated below. Notice each of the spurs of this line meets the others at Junction City There are no terminal costs on the WGS Line and all non-transport costs (labor, power etc.) are the same at all four places. The production process to make widgets uses four ton of wids and three tons of gets for every one tone of widgets. Wids can be shipped at $5 per ton-mile, gets at $10 per ton-mile and widgets at $20 per ton-mile.
a. Calculate the ideal weights for both inputs and the final product.
b. Where should Webster Widget Works locate? Explain.
c. If technological change in the transporting of widgets reduces the cost per ton-mile to $10, will this effect your location? How?
