Decreasing or constant economies to distance

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Wheat can only be sold at a central market place M. All producers that do not produce it at M need to haul it there in order to sell it and will incur transportation cost. People are willing to pay $222 per ton of wheat; its marginal production cost equals $10 per ton. Freight cost per ton and mile is given by T=2x0.5, where x denotes the distance from M in miles. (a) Calculate the maximum distance to the east of M at which the good will be produced. (b) Do the transportation cost exhibit increasing, decreasing or constant economies to distance?

Reference no: EM131004590

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