1. If the output from a land source brings revenue of $400, transport costs of s
ID: 1220824 • Letter: 1
Question
1. If the output from a land source brings revenue of $400, transport costs of shipping this output to market are $55 and the land used in production is 4 acres, what will the rent for this land be? If you can’t solve this problem, state why it is not possible.
2. Suppose from the question above that you also know that non-land payments are $45. Now can you find what the rent for this land will be?
3. At any point immediately adjacent to the market in the von Thunen Model what can you say about the prevailing rent for that land?
Explanation / Answer
1. Given transport cost=$55
Land Used = 4 acre
Revenue from land = $400
Rent can not be calculated because the selling price of output and other costs are not given.
2. Price is not there.
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