Matter Transmitter and Trading City Consider a region with two standardized products (bread and shirts) that are
transported by horse-drawn wagons. There is a single trading city. Consider the effects of a new matter transmitter,
an indivisible input that is economical for trading firms in the city, but not for an individual household. A transmitter
instantly transports goods from a production site (a farm or workshop) to the trading firm, and the marginal cost is
zero.
a. The labor used in transporting products from production sites to trading firms will [increase; decrease; not
change ] because...
b. The volume of trade in the region will [increase; decrease; not change ] because...
c. The labor used in processing transactions (banking, accounting, insuring) will [increase; decrease; not change] because...
d. Review your answers to parts a) and c) above. The trading city will grow if _____