A firm produces a product made of a rare stone but has shipping costs. For simplicity, ignore all non-shipping costs (labor costs, etc.), they will be equal regardless of location. The resource quarry and the final market are 100 miles apart in a perfectly straight line. The firm must locate along this line. To produce the product, the firm requires an input 100 lbs of stone. They then chisel the product and their final product is 85lbs, but slightly more delicate to ship. Shipping costs are $3/lb for the raw materials, and $3.25/lb for the final product. What are the firm's costs if they locate: a) 50 miles away from the resource. b) 75 miles away from the

A firm produces a product made of a rare stone but has shipping costs. For simplicity, ignore all non-shipping costs (labor costs, etc.), they will be equal regardless of location. The resource quarry and the final market are 100 miles apart in a perfectly straight line. The firm must locate along this line. To produce the product, the firm requires an input 100 lbs of stone. They then chisel the product and their final product is 85lbs, but slightly more delicate to ship. Shipping costs are $3/lb for the raw materials, and $3.25/lb for the final product. What are the firm's costs if they locate: a) 50 miles away from the resource. b) 75 miles away from the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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