Distance to cityedge (miles)123456789101112131415HousingDeveloper's BidRent ($/acre)$1,000,000$900,000$800,000$700,000$600,000$500,000$400,000$300,000$200,000$100,000$0$0$0$0$0Farmer's BidRent Curve($/acre)$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000$600,000The maximum amount that housing developers and farmers are willing to pay for land isdepicted in the table above:1. How far from the CBD will developers be willing to build houses?2. If the market price of a harvest increases by $100,00 but farmer costs remain the same,what will happen to the edge of the city over the long run?

Answered: The maximum amount that housing…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Distance to city
edge (miles)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Housing
Developer's Bid
Rent ($/acre)
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
$0
$0
$0
$0
Farmer's Bid
Rent Curve
($/acre)
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
$600,000
The maximum amount that housing developers and farmers are willing to pay for land is
depicted in the table above:
1. How far from the CBD will developers be willing to build houses?
2. If the market price of a harvest increases by $100,00 but farmer costs remain the same,
what will happen to the edge of the city over the long run?

Expert Solution

Step 1: Define bid rent curve

A bid rent curve is a graphical representation of the variation in the amount that individuals or businesses are willing to pay (bid) for a specific piece of land or location at different distances from a central point or area, typically the central business district (CBD) of a city or town. It is a fundamental concept in urban economics and geography and helps explain how land use patterns develop within cities.

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