Consider a manufacturing firm in a linear city that produces 12 tons of output per day and transports some of its output on trucks via a highway 2 miles east of the city center and transports the rest on airplanes that leave from an airport 6 miles of the city center. Intraurban transportation is via traucks, with a unit cost of $5 per mile. Revenue ($1,000) per day and other costs ($200 per day) do not depend on the firm's location within the city, The firm employs excatly 1 hectare of land regardsless of location (it does not engage in factor substitution).
a. Draw the firm's bid-rent curve for land from the city center to a point 10 miles east if all of the firm's outpit is transported to the highway(none to the airport). Calculate the slope of the curve for each segment.
B. Now draw bid-rent curve for the case where half(0.5) of the output is transported to the highway, and half (0.5) to the airport. Calculate the slope of the curve for each segment.
c. Finally, draw the bid-rent curve for the case where three-fourths(.75) of the output is transportd to the highway, and one -fourth (0.25) to the airport. Calculate the slope of the curve for each segment.