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Industrial Location

Industrial Location. Chapter 4. Three Isoquants. Isocost curve. Slope of isoquant. For a production function with two inputs, Along an isoquant, the change in output is zero, so Therefore,. Equilibrium for a Firm. Slope of Isoquant = Slope of Isocost or.

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Industrial Location

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  1. Industrial Location Chapter 4 1

  2. Three Isoquants 2

  3. Isocost curve 3

  4. Slope of isoquant • For a production function with two inputs, • Along an isoquant, the change in output is zero, so • Therefore, 4

  5. Equilibrium for a Firm • Slope of Isoquant = Slope of Isocost or 5

  6. Isocost curve and isoquant map showing a firm’s equilibrium 6

  7. Resource use based on location 7

  8. Pine Grove Boughs:$150 per load Wages:$400 / week Urban Center Boughs:$250 per load Wages:$200 / week Pine Grove vs Urban Center 8

  9. Pine Grove For $1,000, the firm makes 300 wreaths per week, and Uses 5.253 loads of pine and 0.53 units of labor TC = $1,000 = ($150  5.253) + ($400  0.53). For $2,000, the firm makes 800 wreaths per week, and Uses 8 loads of pine and 2 units of labor TC = 2,000 = ($150  8) + ($400  2) Urban Center For $2,000 the firm makes 800 wreaths per week, and Uses 4.4 loads of pine and 4.5 units of labor TC = $2,000 = ($250  4.4) + ($200  4.5). For $3,000, the firm makes 1,500 wreaths per week, and Uses 5.6 loads of pine and 8 full-time workers. TC = $3,000 = ($250  5.6) + ($200  8). Three isocost curves for $1,000, $2,000, and $3,000 9

  10. Long–run average cost curve 10

  11. Location orientation chart 11

  12. Long–haul economies 12

  13. 13

  14. Total Transport Costs 14

  15. 15

  16. Firm location on non–linear routes 16

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