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In Retireland, no one commutes to work, and everyone consumes a single good (food), which is imported from another region and can be purchased (one meal at a time) from the nearest vending machine. Alternatively, food can be delivered by a distant catapult, capable of fl inging a meal through a food slot on the customer's roof. The price of a delivered catapult meal is $6 and the price of a vending-machine meal is $2. The travel cost for consumers is $0.04 per roundtrip meter ($0.02 per meter traveled).
a. Use a martini-glass fi gure like Figure 2-1 to show the equilibrium market area of the vending machine. The stem of the martini glass is _____ and the slope is _____ per meter, and the horizontal curve showing the cost of catapult meals is at _____ . The market area is _____ meters on each side because. . . .
b. Arrows up, down, or horizontal: As the distance to the nearest vending machine decreases, the price of land _____ and population density _____ .
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