Exercises Chapter 6 2019.pdf - Exercises Chapter 6 Question 3 Consider a manufacturing firm that occupies two hectares of land The firm produces 10 tons

Exercises Chapter 6 2019.pdf - Exercises Chapter 6 Question...

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Exercises Chapter 6 Question 3: Consider a manufacturing firm that occupies two hectares of land. The firm produces 10 tons of output per day and sells its output at a price of 80 per ton. The firm does not engage in factor substitution when the price of land changes. Intra-urban transportation is on trucks, with a unit cost of 12 per ton per mile. The firm’s non -land cost is 200 per day. The firm exports its output via circumferential highway (beltway). Compute the bid-rent circle for land for different distances from the beltway, from a distance of zero to five miles. The bid rent at the beltway (d=0) is ___, and the slope of the bid-rent curve is ___ per mile. Question 5: Suppose a city widens the streets in an industrial area, thus improving the access of trucks to an inter-state highway. A. in the long run, the bulk of the benefits of street improvements go to the [workers, trucking firms, landowners, manufacturing firms] because… B. illustrate with a graph Question 8: Consider a monocentric city where the cost of commuting is \$40 per mile per month. A

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Unformatted text preview: household located 8 miles from the city center occupies a dwelling with 1000 square feet at a monthly rent of \$600. Non-land cost per dwelling is \$250, and there are 10 houses per hectare. a. The (rental) price of housin g at a distance of 8 miles is ___ per square foot. Computed as… b. Suppose the rental income is the only revenue from land. The bid rent for land at a distance of 8 mile is ___ per hectare, as computed as … c. Assume that the demand for housing is perfectly elastic, the price of housing at a distance of 5 miles is ___ per square foot, computed as … d. Assume that housing firms do not engage in factor substitution. The bid-rent for land at a distance of 5 miles is ___, computed as… e. Suppose consumers engage in consumer substitution and firms engage in factor substitution. The bid rent at a distance of 5 miles will be [greater, less] than the number computed in part (d) because …...
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