The remaining parts of this question are about a orange juice maker that needs to decide where to locate its
factory. The area of land looks like this:
The grove of orange trees is located at x = 0.
The port that ships orange juice to the rest of the country is located at x = 1.
At the factory, the juice is squeezed out of the orange and bottled.
One orange costs 5 cents to transport over a distance of 1 mile
One bottle of orange juice requires two oranges
One bottle of orange juice costs 8 cents to transport over a distance of 1 mile
(b) Based on the above information, find ci, the cost of shipping one bottle’s worth of inputs over 1 mile.
(c) Using the formula given in class, find the firm’s transport costs if it located at x = 1/4.
(d) Where should the firm locate in order to minimize its transport costs? Give a brief explanation.