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Consider a monocentric city where the cost of commuting is $40 per mile per month. A household located eight miles from the city center occupies a dwell- ing with 1,000 square feet at a monthly rent of $600. Nonland cost per dwelling is $250, and there are 10 houses per hectare. a. The price of housing at a distance of eight miles is per square foot, computed as . . . . b. The bid rent for land at a distance of eight miles is per hectare, computed as . . . . c. Assume that the demand for housing is perfectly inelastic. The price of hous- ing at a distance of five 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 five miles is per hectare, computed as . . . . e. Suppose consumers engage in consumer substitution and firms engage in factor substitution. The bid rent for land at a distance of five miles would be [greater, less] than the number computed in part (d) because . . . .
Chapter 6, Problem 8(choose chapter or problem)
Housing Price and Land Bid-Rent Numbers
Consider a monocentric city where the cost of commuting is $40 per mile per month. A household located eight miles from the city center occupies a dwell- ing with 1,000 square feet at a monthly rent of $600. Nonland cost per dwelling is $250, and there are 10 houses per hectare.
a. The price of housing at a distance of eight miles is ______ per square foot, computed as . . . .
b. The bid rent for land at a distance of eight miles is ______ per hectare, computed as . . . .
c. Assume that the demand for housing is perfectly inelastic. The price of housing at a distance of five 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 five miles is ______ per hectare, computed as . . . .
e. Suppose consumers engage in consumer substitution and firms engage in factor substitution. The bid rent for land at a distance of five miles would be [greater, less] than the number computed in part (d) because . . .
Questions & Answers
QUESTION:
Housing Price and Land Bid-Rent Numbers
Consider a monocentric city where the cost of commuting is $40 per mile per month. A household located eight miles from the city center occupies a dwell- ing with 1,000 square feet at a monthly rent of $600. Nonland cost per dwelling is $250, and there are 10 houses per hectare.
a. The price of housing at a distance of eight miles is ______ per square foot, computed as . . . .
b. The bid rent for land at a distance of eight miles is ______ per hectare, computed as . . . .
c. Assume that the demand for housing is perfectly inelastic. The price of housing at a distance of five 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 five miles is ______ per hectare, computed as . . . .
e. Suppose consumers engage in consumer substitution and firms engage in factor substitution. The bid rent for land at a distance of five miles would be [greater, less] than the number computed in part (d) because . . .
ANSWER:Step 1 of 6
Given :-
A monocentric city cost of commuting is $40 per mile per month. A household located 8 miles from the city center occupies a dwelling with 1,000 square feet at a monthly rent of $600. There are 10 houses per hectare and $250 is the Non land cost per dwelling.