1) Consider a manufacturing firm that occupies two hectares of land. The firm produces 10 tons of output per day and sells its output at a price of $80 per ton. The firm does not engage in factor substitution as the price of land changes. Intraurban transportation is on trucks, with a unit cost of $12 per ton per km. The firm's nonland cost is $200 per day. The firm exports its output via circumferential highway (beltway). a) Draw the firm's bid rent curve for land for different distances from the beltway, from a distance of zero to five km. b) Compute the bid rent per hectare at the beltway and the slope of the bid rent curve.

1) Consider a manufacturing firm that occupies two hectares of land. The firm produces 10 tons of output per day and sells its output at a price of $80 per ton. The firm does not engage in factor substitution as the price of land changes. Intraurban transportation is on trucks, with a unit cost of $12 per ton per km. The firm's nonland cost is $200 per day. The firm exports its output via circumferential highway (beltway). a) Draw the firm's bid rent curve for land for different distances from the beltway, from a distance of zero to five km. b) Compute the bid rent per hectare at the beltway and the slope of the bid rent curve.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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