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5. Location Choice with Multiple Inputs Suppose a transport cost-oriented firm consumes 4 inputs (I1, I2, 13, and I.) to produce one output, which is
5. Location Choice with Multiple Inputs Suppose a transport cost-oriented firm consumes 4 inputs (I1, I2, 13, and I.) to produce one output, which is consumed at the output market M (see Figure below). H is a transportation hub. Monetary weights are given in parenthesis: M(30), 17(10), 12(10), 13(30), and I.(25). a) Where will a transportation cost-minimizing company locate? b) Now assume the monetary weight of input source 1, decreases to $5 (all else stays the same), where will the company locate now? c) If all monetary weights (output as well as inputs) were equal to $10, can the firm locate anywhere? True or false? Explain. d) If all monetary weights (output as well as inputs) were equal to $10 and but I, has a monetary weight of $20, where will the firm locate? 101 12 M 30
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