Assume That a Firm Wants to Set Up a Factory

question 85

Essay

Assume that a firm wants to set up a factory.It considers four different locations.The rent of the factory space and the time taken to transport the products from each of the locations to the market is shown in the table below.It is also given that the opportunity cost of time is $10 per hour.
a)Which is the optimum location?
b)If the opportunity cost of time changes to $30 per hour,is there any change in the optimum?

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Definitions:

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