Question 2 In the new city of Toweria, all buildings are 5 oors tall. The Great Toweria Fire burns down all these old buildings, and new buildings have to be constructed. Because of advances in construction technology, these new buildings can be of any height. The rm owning land at site X nds that its cost-minimizing decision is to build a 5-floor building once again. This decision is made based on the following information: 0 Each rm in Toweria requires 1 unit of oor space in order to operate 0 The price of land at site X is $5000 per unit of land area. 0 The rm ends up spending $3000 in total on its new ofce building [divided between building spending and land) (a) Draw an isocost and isoquant diagram with the following information: o The axes of the diagram are building spending (B) and land area (L) 0 The isoquant (IQ) for 1 unit of ofce space 0 The isocost line (10) for the rm at site X. Label both intercepts of this line 0 The point describing the costminimizing decision of the rm (point C) At site Y, the the price of land is lower: $4000 per unit of land area. (b) Suppose that the rm at site Y builds a 5 oor building. If it did so, how much would the rm spend in total on its new ofce? This should include building spending as well as spending on land area. (0) 0n the same diagram as before, draw the isocost line for the level of spending you found in the previous part. Label this line 102. (d) To minimize costs, should the rm at site Y build a taller / shorter / same height building as the rm at site X? Explain briey