Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
2
![Consider the example of a bid rent curve in a monocentric city with the following
diagram:
A Cross-Section of Land Rents in Melbourne
L
L
B
CBD
B
A = Agricultural rent = $500/km2
C= Construction rent = $10,000/km2 assuming two dwellings per km2
L= location rent from $0 to $9,000/km2
CBD Melbourne Central Business District
B = Melbourne urban boundary (expanding km radius) considered 20km
i. Explain the impact on rent at a point 12km from the city centre when the renters now
work from home with no travel required to the CBD. Thus, their transport cost is now
$0.
ii. What is the shape of the bid-rent curve in the scenario provided in part į?
iii. If all citizens were to be working 40% at home and 60% in the office, what would the
rent be for a dwelling located 17km from the Urban boundary?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5fb5b4df-ad1d-4eb5-a5a3-fc578ce1ecb3%2F4980050c-7c94-4864-a5bb-5dcd3c377f16%2F9bur4i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the example of a bid rent curve in a monocentric city with the following
diagram:
A Cross-Section of Land Rents in Melbourne
L
L
B
CBD
B
A = Agricultural rent = $500/km2
C= Construction rent = $10,000/km2 assuming two dwellings per km2
L= location rent from $0 to $9,000/km2
CBD Melbourne Central Business District
B = Melbourne urban boundary (expanding km radius) considered 20km
i. Explain the impact on rent at a point 12km from the city centre when the renters now
work from home with no travel required to the CBD. Thus, their transport cost is now
$0.
ii. What is the shape of the bid-rent curve in the scenario provided in part į?
iii. If all citizens were to be working 40% at home and 60% in the office, what would the
rent be for a dwelling located 17km from the Urban boundary?
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