Assignment:
Principle of Median Location
Q: Consider a firm that delivers video rentals to its customers. The spatial distribution of customers is as follows: 10 videos are delivered to location W, 10 miles due west of the city center, 50 videos are delivered to the city center, 25 videos are delivered to E 1 mile due east of the city center, and 45 videos are delivered to point F, 2 miles east of the city center. Production costs are the same at all locations.
a. Using a line graph, show where the firm should locate. Explain your location choice,
b. Suppose that point wis in a valley and point Fis at the top of a mountain. Therefore, the unit cost of easterly transport (shipments from west to east) is twice the unit cost of westerly transport. If production costs are the same at all locations, where should the firm locate? Explain.