5 Figure 5.4 Bid Rent in the Example r (d) 4000 r (d) = 4000 - 500d Boundary d 8 na The example shown in Figure 5.4 was based on production of...
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Figure 5.4.png


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Figure 5.4.png

SA. 5
Figure 5.4
Bid Rent in the Example
r (d)
4000
r (d) = 4000 - 500d
Boundary
d
8
na
The example shown in Figure 5.4 was based on production of 10,000 bushels on an acre of land, selling
at $2/bushel, with non-land production costs of $16,000, and transport costs of $0.05 per bushel per
kilometer. Suppose the price changed to $2.20/bushel, and transport costs increased to $0.10 per
bushel per kilometer, and everything else remained the same. Sketch the new bid rent function on the
existing drawing, and include the values of the maximum rent, and maximum distance from the market.

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