Dividing line between the markets served by the two regions

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Reference no: EM131998145

Two regions with extensive apple orchards attempt to sell their apples to grocery stores throughout the country. Farmers in the western region have very large orchards, and they can obtain rates of $1.40/truckload/mile for shipping their products to market in the middle of the country. Due to the large size of their farms, these farmers use large trucks that can transport 20 tons of apples. Their costs of growing, picking, and packing the apples average $200/ton. Farmers in the eastern market have smaller farms, and they must use smaller trucks. Their costs are $250/ton for growing, picking, and packing the apples and $1.60/ truck-mile for transporting a 16-ton truckload. The distance between the eastern and western areas is 2500 miles. Assuming that the apples are in fact identical in size and taste, what will be the dividing line between the markets served by the two regions? What will be the price/ton of apples at this midpoint?

Reference no: EM131998145

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