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 mile. The firm’s nonland cost is $200 per day. The firm exports its output via a circumferential highway (beltway).
a. Draw the firm’s bid-rent curve for land at different distances from the beltway, from a distance of zero to five miles.
b. The bid rent at the beltway is ___________ per hectare.
c. The slope of the bid-rent curve is __________ per mile. Explain.