Question Look at the chart above a Now suppose you live in a

Question: Look at the chart above

a: Now, suppose you live in a capital which has a strict limit on the total amount of available land (for example, Hong Kong). Draw an aggregate supply curve and comment on the possible configurations of the city and the surrounding countryside

b: Now imagine that because of global warming you lose some land, and suffer some damage to land usage valuation through higher insurance premiums to cover weather damage (cyclones, erosion, no regulating effect of snow [eg. Bangladesh]). Is it possible some land will become wilderness?

c: What does the development of an information-rich service economy, with less need for physical transport, imply for land usage, according to the model?

120 T 100 80 residential Farming Wilderness 60 40 20 0 Parramatta pringwood aru -20

Solution

land, labor, capital, and entrepreneurship.

Is it possible some land will become wilderness?

yes it is possible