urban economics hw help

5. Consider a trading city with one rm and two products only, both of which are transported using horse-pulled wagons. For each product, transport costs account for exactly 40% of the unit price. - Currently, there are 80 wagoneers and 80 bankers employed by the trading rm. - Number of wagoneers to run the operations smoothly is proportional1 to the volume of trade, and negatively proportional to the speed of the wagon travel, - Number of bankers required to run the operations smoothly is proportional to the volume of trade, - Price elasticity of demand for both products is exactly equal to -2.5, Suppose now that all the trade routes are renewed so that the speed of wagon travel doubled, which means that the transport costs halved for any given number of employees. a. What are the effects of the road renewal on product prices? b. What are the effects of the road renewal, on the volume of trade the firm handles? c. What is the new equilibrium number of wagoneers and bankers hired by the firm