Question

4. Matter Transmitter for Manufacturing Consider a manufacturing industry that exports its output by ship. Each firm has total revenue per month of $1,400 and a monthly non-land production cost of $400. Each firm initially transports its output from its factory at location x to the port (x=0) on trucks. A firm's freight cost is $100 per block from the port. Suppose a second transport option is developed: For a monthly rental cost on $300, a firm can use a matter transmitter to transport its output from its factory to a matter receiver at the port, up to a distance of seven blocks. For a firm usme the matter transmitter, the marginal cost of transportation is zero. A prou can be transported using a matter transmitter only once (chaining transmite is impossible) and a firm must use either the truck or the transmitter, All the relevant markets are competitive. a. Illustrate the effects of the matter transmitter on the bid-rent curve to facturers from x = 0 to x = 10. b. Firm's will use the transmitter for locations ... c. Among economic agents within the city, the transmitter generate for __ _] Illustrate. 5. Manufacturers and Airports ron the bid-rent curve for manu- mitter generates benefits Cannid

Answer 1

a) The effects of the matter transmitter on the bid-rent curve for manufactures from x=0 to x=10:-

Before the invention of the matter transmitter, the bid rent curve will be bid=1000-100 miles.

b) The firm will use truck for distances within 3 miles and then use the transmitter for distances between 3 and 7 miles.

And for larger or greater distances such as greater than 7 miles the firm will use both truck and the transmitter.

firms will continue to use the truck over the intervals- 0 to 3; 7 to 10..

firms will use the transmitter over the interval 3 to 7.

or It is given that a manufacturing industry exports its output by ship.The revenue of each firm is fixed at $1400 per month and no land production cost is $400 per month.

a firms freight cost is $100 per block from the port, and a monthly rental cost of $300 up to a distance of 7 blocks.

c)

1000-100 mile if mile $\leq$ 3

bid= 700 if 3 < mile $\leq$ 7

700-100 (mile-7) if mile>7