City Structure. Consider a city that consists of 2 groups that compete for land Offices and commuters. Offices compete in perfectly competitive markets. Offices face freight, labor, and land costs.

The labor costs are given by: L (x office) = 10 + 2xoffice

Freight costs are given by: F(x office) = 2 + xoffice where xoffice is the distance that offices locate away from the city center.

Finally, offices use one unit of land, so their land costs are given by the price of land, which you can denote as R(xoffice).

You can assume offices use zero intermediate inputs in production (e.g I= 0). Denote the revenues for offices as T R office

Commuters allocate money between housing and commuting such that their bid rent curve is given by: R (xcommuter) = 82xcommuter

(a) Write out the profit function for office firms as a function of distance to the city center.

(b) Derive the bid-rent curves for offices. To get full credit, you need to show all relevant work

(c) What must be true for the y-intercept (the "R" intercept) of offices to exceed the R-intercept for commuters? Your answer should be a single inequality.

(d) assume that the restrictions you placed on the model in part C hold. Graph both bid-rent curves; make sure to label all important components (at a minimum: axis', r-intercepts, and denote which line corresponds to which bid rent curve. You will need to label at-least one x-intercept as well). Find the range of distance from the center that offices and commuters will be located. Label these ranges on your graph.