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Trading firms will increase decrease or no change

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Reference no: EM13175249

Matter Transmitter and Trading City Consider a region with two standardized products (bread and shirts) that are

transported by horse-drawn wagons. There is a single trading city. Consider the effects of a new matter transmitter,

an indivisible input that is economical for trading firms in the city, but not for an individual household. A transmitter

instantly transports goods from a production site (a farm or workshop) to the trading firm, and the marginal cost is

zero.

a. The labor used in transporting products from production sites to trading firms will [increase; decrease; not

change ] because... 

b. The volume of trade in the region will [increase; decrease; not change ] because... 

c. The labor used in processing transactions (banking, accounting, insuring) will [increase; decrease; not change] because... 

d. Review your answers to parts a) and c) above. The trading city will grow if _____

Reference no: EM13175249

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