(solution) Suppose that landowners have the power to restrict x, the

(solution) Suppose that landowners have the power to restrict x, the

Suppose that landowners have the power to restrict x?, the distance to the edge of the city, in order to increase the land rent they earn. Suppose that, with no restriction, the urban land rent function is given be r = 100 – x, where x is distance in blocks to the CBD. Suppose that agricultural land rent rA is equal to 20.

a.) Compute x? in the absence of any restriction by landowners, and illustrate your result in a diagram. now suppose that the landowners restrict x? to a value of 65 blocks, the urban land rent curve shifts up and the new rent function is r = 105 – x