Question 3 The figure shows the housing price (rent) per square foot of houses located at different distances to the employment area (city centre), with and without the consumer substitution effect. Taking point j in the figure as an example, assuming that the household's monthly maximum budget is $800, if the household is living at a distance 10 km to the employment area, the unit commuting cost is $50 per km per month, and the unit price of housing per square foot per month is $0.30. In other words, the household living at point j can afford to live in a 1,000 square feet house, by paying a monthly rent of $300 ($0.30 x 1,000 sf) and a monthly commuting cost of $500 ($50 x 10 km). 3(a) Calculate the maximum house size the household can afford to live at a distance of 5 km to the employment area (point f in the figure).

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

plz answer asap dont answer by pen paper

Price of housing (per square foot)
0.80
0.55
0.30
0.21
Price without
consumer
substitution
Price with consumer
substitution
5
10
x: Distance to employment area
13
Transcribed Image Text:Price of housing (per square foot) 0.80 0.55 0.30 0.21 Price without consumer substitution Price with consumer substitution 5 10 x: Distance to employment area 13
Question 3
The figure shows the housing price (rent) per square foot of houses located at different distances to the employment area (city
centre), with and without the consumer substitution effect. Taking point j in the figure as an example, assuming that the
household's monthly maximum budget is $800, if the household is living at a distance 10 km to the employment area, the unit
commuting cost is $50 per km per month, and the unit price of housing per square foot per month is $0.30. In other words, the
household living at point j can afford to live in a 1,000 square feet house, by paying a monthly rent of $300 ($0.30 x 1,000 sf)
and a monthly commuting cost of $500 ($50 x 10 km).
3(a) Calculate the maximum house size the household can afford to live at a distance of 5 km to the employment area (point f
in the figure).
Transcribed Image Text:Question 3 The figure shows the housing price (rent) per square foot of houses located at different distances to the employment area (city centre), with and without the consumer substitution effect. Taking point j in the figure as an example, assuming that the household's monthly maximum budget is $800, if the household is living at a distance 10 km to the employment area, the unit commuting cost is $50 per km per month, and the unit price of housing per square foot per month is $0.30. In other words, the household living at point j can afford to live in a 1,000 square feet house, by paying a monthly rent of $300 ($0.30 x 1,000 sf) and a monthly commuting cost of $500 ($50 x 10 km). 3(a) Calculate the maximum house size the household can afford to live at a distance of 5 km to the employment area (point f in the figure).
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Budget Constraint
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education