Consider the simple von-Thunen model of agricultural land use developed in class. This question asks you to analyze the land use of carrot farmers who use a fixed proportion production technology. Assume the following: -- carrot yield (E) is 20 tons per acre -- carrots sell at $15 per ton (P) at the market -- non-land input costs (I) are $60 per acre -- transport cost (t) is $4 per ton per mile -- farmers pay the transport cost of moving carrots d miles to the market a. Derive the bid-rent curve per acre of land for carrot farmers by imposing the appropriate long-run equilibrium condition. Explain the condition. Show all steps. b. Plot the bid-rent curve for carrot farmers. Then calculate the land area where carrots are grown. c. How much will the landlord charge to rent 1 acre at the city? at d=1 mile? at d = 5 miles? Show computations. d. Where does Farmer Jones prefer to locate? Why

Consider the simple von-Thunen model of agricultural land use developed in class. This question asks you to analyze the land use of carrot farmers who use a fixed proportion production technology. Assume the following: -- carrot yield (E) is 20 tons per acre -- carrots sell at $15 per ton (P) at the market -- non-land input costs (I) are $60 per acre -- transport cost (t) is $4 per ton per mile -- farmers pay the transport cost of moving carrots d miles to the market a. Derive the bid-rent curve per acre of land for carrot farmers by imposing the appropriate long-run equilibrium condition. Explain the condition. Show all steps. b. Plot the bid-rent curve for carrot farmers. Then calculate the land area where carrots are grown. c. How much will the landlord charge to rent 1 acre at the city? at d=1 mile? at d = 5 miles? Show computations. d. Where does Farmer Jones prefer to locate? Why

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 68P

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