3 Consider agricultural land of uniform quality surrounding

3. Consider agricultural land of uniform quality surrounding a city. The possible crops differ in their level of production per hectare, their value in the city and their transport costs according to Unit Value in CityUnit Transport Cost (S/tonne/kilometre) the following table Production (Net of Production Costs) (S/tonne) 800 500 300 200 (tonnes/ha) Milk 4 1.5 0.5 Fruit Vegetables 2 Grain a) In what region would each crop be produced? b) How does the yearly rental price of land depend upon the distance from the city? (i.e., use equations to indicate the rental price of land as a function of distance) (the answer will be in segments) c) What is the impact, on both the choice of crop and the price of land, of a technological improvement that allows the transportation of fruit for $2 per tonne per kilometre?

Solution

Economics
consider agricultural land of uniform quality surrounding a city. the possible crops differ in their level of production per hectare,their value in the city and their transport costs according to the following table